One month and counting until April 15, the tax filing deadline. This year, taxpayers are getting some free advice from two Nassau lawmakers on how to hold onto more of their income.
Nassau County Presiding Officer Judy Jacobs (D-Woodbury) and Legislator Jeff Toback (D-Oceanside) have joined together to remind taxpayers of two important tax tips-the Earned Income Tax Credit and Nassau’s new Anticipated Tax Refund Law that protects consumers.
•The Earned Income Tax Credit:
The Earned Income Tax Credit (EITC), a special federal and state refundable tax benefit, puts money back in the pockets of eligible working families.
“There are thousands of residents in Nassau County who are eligible for the Earned Income Tax Credit and who don’t know about it or fail to file the forms needed to claim it,” Jacobs said.
The federal and state EITC for low to moderate working families is intended to reduce the tax burden on workers, to supplement wages, and to make work more attractive than welfare. Workers who qualify for the EITC and file federal and state tax returns can get back some or all of the income tax that was deducted from their salaries during the year. Even workers whose earnings are too small to have paid taxes could be in line for a refund.
Qualifying individuals who have worked full or part time in the past year and earned modest incomes could be eligible for anywhere from a few hundred dollars to $5,400 depending on their situation. If you work full time and have two or more qualifying children and your earned income was less than $34,458, than you are eligible to receive $5,375 in federal and New York State credit. If you work full time and have one child and your earned income is less than $30,338, you are eligible to qualify for as much as $3,255 in federal and New York State credit. If you work full time but do not have a child and your income is less than $11,490 you are eligible to receive up to $487 in federal and New York State credit.
To learn more about the EITC program call 1-800-829-1040 or visit their website at www.hwcli.com to ask questions about the EITC and other tax issues.
•The Anticipated Tax Refund Law
Tax preparers are required to disclose all fees and charges for Refund Anticipation Loans (RAL). The loan interest and fees are charged against the refund to which the consumer is entitled. Frequently, consumers who utilize these types of tax services are unaware that they are entitled to their full refund through the IRS or the state provided they wait the processing period.
“It’s misleading,” Toback said. “These ‘loans’ come at a high price. Often the tax preparers do not disclose complete and accurate information to consumers concerning the interest and fees charged. The consumer can end up coming away which just a fraction of their full refund, after the fees are subtracted.”
The Anticipated Tax Refund law requires that before a consumer enters into a RAL transaction, the tax preparer must disclose in both English and Spanish, and in a form separate from the application, that “this is a loan.”
In addition, the consumer must be told that even if they choose not to take the loan, they can still receive their refund quickly by filing electronically and receive a refund through the mail. The consumer can avoid this fee and still receive a refund in as few as 10 days by having the IRS deposit the refund check in a bank account, or wait for the IRS to mail a check. If they do not have a bank account, they must be told that they may wish to consider obtaining one.
According to reports, the Refund Anticipation Loans drain billions from the pockets of American consumers. Tax preparers and facilitators of these transactions often target the working poor who receive the Earned Income Tax Credit. In 2002, 55% of those consumers who received RALs also received the EITC. These loans cost American workers $1.14 billion in loan fees, plus an additional $406 million in other fees.