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Many Utah families are missing out on a potentially big tax break

Some of the biggest changes to the tax code in decades took effect last year, and Michelle Singletary shares input from members of the American Institute of Certified Public Accountants on the most common tax questions they’re getting from clients. AdobeStock

SALT LAKE CITY — State leaders warn that too many needy Utah families are missing out on a possible tax break that could save them hundreds of dollars a year.

With the tax season approaching, Lt. Gov. Spencer Cox, in conjunction with the state Department of Health and other partners, are encouraging more people to take advantage of the federal earned income tax credit, which helps lower income families save money on their yearly income taxes.

The earned income tax credit is a tax benefit for working people with low to moderate incomes that reduces the amount of taxes owed and may provide tax refunds for some qualifying tax filers, Cox said.

“We have so many people that aren’t taking advantage of it. And they’re people who need it the most,” he said, speaking at a news conference Friday at the Sorenson Unity Center in Salt Lake City. “The frustrating piece of this is we know that this can be very helpful for them — lower their tax liability and maybe even get them a tax refund, which can help them with so many other things (like) medical services and transportation needs.”

He added that the tax credit is specifically designed to aid “the most vulnerable amongst us,” but not enough families are using it.

“We have a program that’s been around since the ’70s, that’s very popular with Republicans and Democrats, and we want to make sure that every Utahn who qualifies gets an opportunity to take advantage of it,” Cox said.

Part of the problem is that too few people are aware of the tax credit, he said.

“If you’re just struggling to get through the day and make sure your kids have food on the table and you can get them to school, you’re not thinking about your taxes,” he said. “But what you’re missing out on is, if you do file, you could get an actual refund that that could help you with those other things that you need.”

Every year, 1 in 4 eligible Utahns fails to claim the earned income tax credit, he said. In 2019, 171,000 tax filers received the credit, while another 57,000 eligible Utahns did not, according to a news release. Last year, the average credit for a Utah tax filer with children was $2,130. For single people without children earning less than $15,000, the average tax credit was $300, the release stated.

Statewide, the current earned income tax credit filing participation rate is 75% and has remained unchanged for several years. Officials estimate the tax credit has the potential to put an additional $10 million to 20 million into local economies.

“Our analysis shows that for every 1,000 EITC claimants, we bring in $1,000,000 into the state,” explained Greg McDonald, director of the Community Action Partnership of Utah and Volunteer Income Tax Assistance coordinator. “Our initial target is 22,000 more people claiming the EITC. When we achieve that goal, Utah will have the highest number of EITC claims of any other state, with many families moving toward financial security.”

He suggested that anyone with children making less than $56,000 should contact Volunteer Income Tax Assistance at 800-906-9887 to locate a help center and find out what opportunities may be available to them. For more information about taxpayer assistance visit utahtaxhelp.org.