What is the Earned Income Tax Credit (EITC)?
Each year, the Earned Income Tax Credit (EITC) supports the financial stability of over 27 million of low-and moderate-income workers by reducing the regressive federal tax burden on low-wage earners. Depending on a worker’s income, the amount of taxes owed may be less than the credit and the filer receives a refund. Filers see an average of $2081.08 back in their pockets each year. Beyond encouraging work, the EITC refund provides, millions of households an opportunity to catch up on bills, provide for their families and maybe even save for their future. Studies of EITC have found that children living in households who receive the credit have improved health and educational outcomes. For such a modest program, it goes a long way to helping keep people out of poverty.
Maine has an additional Earned Income Tax Credit
The federal EITC has been so effective, that 26 states and D.C. have enacted a state EITC to further boost economic mobility for workers. These are often based on a percentage of the federal EITC and some states have a refundable credit that allows those that do not owe taxes to still receive the credit as a refund. This year Maine’s Earned Income Tax Credit (EITC) is refundable to Maine residents. Previously, the Maine EITC could only be used to reduce an income tax liability to zero
How does Maine benefit from EITC?
Maine directly benefits from the estimated 99,871 filers that receive the credit each year. Estimates suggest that the credit may create local economic impacts equivalent to at least twice the amount of EITC dollars received.
How can workers claim the EITC?
Across the country, there are over 3,000 Volunteer Income Tax Assistance (VITA) sites where eligible filers can get their taxes prepared for free! Across Maine there are 22 sites ready to help tax filers claim their federal and state credits. “The process was easy and well managed. My taxes are pretty basic, but this program was able to help me with a few more complicated aspects of my taxes. I was able to use the money I saved towards other important things, like my family.” Alison, EITC recipient from Western Maine CA$H Coalition’s free tax preparation program in 2016.
Find a CA$H Maine tax site near you for free and high quality tax preparation services!