Many Big Isle Families Eligible for $5K Tax Credit
As tax time approaches, Hawaii residents, especially those who have seen a reduction in income or increase in the size of their family, need to be aware of an important tax credit.
Millions of workers across the nation could overlook the federal Earned Income Tax Credit which provides a credit of up to $5,751 for eligible families with three or more children. A tax credit reduces the amount of taxes owed and can provide a refund if it is greater than the tax liability.
In Hawaii County, 14.4% of residents were below the poverty level, according to a US Census Bureau report from 2010. The average for the state was 9.6%. Otherwise, the median household income for the island was reported to be $54,996.
Because the amount of the credit is based on income and number of children, many people will qualify for the credit for the first time this year because of reductions to their pay. According to the Internal Revenue Service, married couples filing jointly who have three or more children with 2011 earnings of less than $49,078 may qualify for the maximum credit. For families with no children, the income cap is $18,780 to qualify for a credit of up to $464.
The EITC was first enacted by Congress in 1975 to assist low- and moderate-income families. While more than 26 million workers received the tax credits last year, the IRS estimates that up to one in five eligible families – including those with workers who lost jobs or went back to work for lower wages – failed to claim the credit.
“We want to raise that to five out of five,” Frecia Basilio, Economic Development Specialist for Hawaii County’s Department of Research and Development, said in a statement. “This money can make a real difference to workers struggling in this economy. You earned it. Now you need to file, claim it and get it.”
According to Basilio, the average earned income credit claimed last year was $2,100. For information about the credit visit www.irs.gov/eitc or www.hawaiicounty.gov/research-and-development. The county website also provides sources of volunteer income tax assistance.
Despite efforts in the past to change the state’s tax laws by some lawmakers and non-profit agencies concerned about Hawaii’s tax burden on working families and their children, Hawaii is not among the 23 states that also offer some form of EITC.