The Internal Revenue Service has designated Jan. 31 as National Earned Income Tax Credit Awareness Day. At Oweesta, we work with Native communities to help them build financial assets, and we've seen how effective the EITC can be to jumpstart those efforts. So we are partnering with the IRS to promote awareness about EITC.
If you worked during 2007 and made under $40,000, you may qualify for a tax refund - even if no taxes were withheld from your paycheck. EITC is a federal anti-poverty program designed to help low- and moderate-income working families. About $40 billion is available each year. It is easy to see how large an impact that sum of money can make to a Native family, especially since it is a lump sum payment. The amount you can receive depends upon how much money you earned during the year and how many qualifying children you have. The following maximum income limits apply for tax year 2007: $37,783 ($39,783 if married filing jointly) for a family with two or more qualifying children; $33,241 ($35,241 if married filing jointly) for a family with one qualifying child; and $12,590 ($14,590 if married filing jointly) if you have no children.
This year the maximum credit (amount you can receive back as a tax refund) is $4,176 for a family with two or more qualifying children. If you have only one qualifying child you could receive up to $2,853, while persons without children can receive up to $428.
There are three important steps in determining whether a child can be counted when determining if you qualify for EITC and how much you can receive: the child's relationship to you, the child's age and whether you provided a residence for the child.
Any child who lives in your household, even if he or she is not your biological child, may qualify if you meet certain relationship tests. That child may be your son, daughter, stepchild, or a descendant of any of those (a grandchild, for example). The child can also be your brother, sister, stepbrother, stepsister, half brother, half sister or any of their descendants (your niece, for example). In addition, any adopted child or foster child placed with you through any government program including a tribal program qualifies under those same guidelines.
The next criterion is the age of the child. Children under the age of 19 at the end of 2007 qualify. Some full-time students and disabled persons over the age of 19 also qualify. The last test involves residency: the child must have lived with you for over one half of 2007. You must meet all three of these tests to claim a qualifying child unless an exception applies to your situation.
Remember, even if you do not have a qualifying child, you may still be eligible for EITC.
How do you apply for EITC or determine if you qualify for a tax refund? If you have access to the Internet, you can determine in advance if you will qualify for the EITC by using the free ''EITC Assistant'' located at www.irs.gov. In addition, local organizations and government agencies have set up numerous free tax preparation sites nationwide to assist you in getting your refund. There is probably a free tax preparation site in your area.
The IRS sponsors the most common type of site called Volunteer Income Tax Assistance sites that are staffed by trained IRS-certified volunteers. These volunteers will prepare and file your tax return for you free of charge. To find one, call (800) 829-1040 or contact your local or tribal government office.
I am very excited about this program. Each year, we reach more and more Native families and help them along their path to financial self-sufficiency. But getting involved in programs like EITC is essential. Almost $8 billion in EITC refunds went unclaimed in 2007. Can you imagine the impact even a small percentage of that amount could make on Indian reservations, Alaska Native villages, Native Hawaiian homelands and in urban Indian communities? Participate in National EITC Awareness Day and help us spread the word through your community.
Elsie Meeks, Lakota, is the president and CEO of First Nations Oweesta Corporation and the chair of the Native Financial Education Coalition. For more information, visit www.oweesta.org/eitc, www.ournativecircle.org or www.nfec.info.