Two million or more of the nation's poorest working families may be losing as much as $2,020 each by failing to file a federal tax return, officials report.
The number of families eligible for that money - known as the earned-income credit - is larger than ever before because Congress raised the benefit and the recession reduced many workers' incomes, Internal Revenue Service Commissioner Fred T. Goldberg Jr. told a news conference."This is a law that really does do good things for working families," Goldberg said. "The measure of our success is if every family entitled to this credit claims it . . . and gets every dollar they are due."
Goldberg helped kick off a nationwide campaign to inform families with children and earnings under $21,250 that they are eligible for the credit. The campaign theme is "Two Simple Steps" reminding workers that to claim the credit they must file a tax return and attach special Schedule EIC.
A family whose income is so low that it pays no income tax can still get the full benefit of the credit - but only if a return is filed. Officials fear many of those who neglect to claim the benefit are those who fail to file because they had nothing withheld from their paychecks.
"This is the largest low-income and moderate-income program the federal government has," said Robert Greenstein, director of the Center on Budget and Policy Priorities, a non-profit organization that is heading the campaign.
More than 12 million families claimed the credit on tax returns filed last year and received a total of almost $7 billion. The IRS estimated that 2 million eligible families failed to claim the credit and that an additional 2 million are eligible this year for the first time.
Greenstein's group, the United Way, organized labor, the U.S. Conference of Mayors and other organizations are distributing information about the credit.
Robert M. Beggan, senior vice president of United Way of America, said the value of the credit to poor families last year was more than twice the $3.1 billion that his 2,200 local chapters raised for charity.
Vincent R. Sombrotto, president of the National Association of Letter Carriers, speaking for the AFL-CIO, pointed out that part-time workers and employees who were on strike during part of 1991 may qualify for all or part of the credit.
The credit was enacted to help offset part of the Social Security tax and to give lower-income workers an incentive to stay off the welfare rolls.
The maximum basic earned-income credit is $1,235. Two supplemental credits, made available last year for the first time, offer up to $357 more for a child born last year and an additional $428 to offset part of the cost of health insurance for a child.