Home > Financial Services >
Miscellaneous Loans > State Earned Income Tax Credit Help
State Earned Income Tax Credit Help |
|
The Federal Earned Income Tax Credit is
among the most powerful tools to boost the income of the working poor. In 1998, 2.4 million California households, or 1 out of every 6 tax returns filed, claimed $3.8 billion in Earned Income Tax Credit benefits. The Earned Income Tax Credit works within the tax system to provide cash assistance to low-income, working households. The assistance depends on the
family's size and income. Fourteen states (CO, IL, IA, KS, MD, ME, MA, MN, NJ, NY, OR, RI, WI, and VT) and Washington, D.C., currently provide state Earned Income Tax Credits to complement federal credit and to increase income for the working poor. Nine states (CO, KS, MD, MA, MN, NJ, NY, WI, and VT) and Washington, D.C., have refundable credits. In California, recent attention on working-poor families has increased interest in proposals for a state Earned Income Tax Credit. The state Earned Income Tax Credit helps supplement earnings of low-income working families. How Does a State Earned Income Tax Credit Work? The pattern for most state Earned Income Tax Credit Help follows the federal credit. State eligibility rules linked to federal credit enables states such as California to partake of federal compliance and coordinated publicity efforts to benefit families. The Earned Income Tax Credit pays refundable tax credits to families whether or not they owe income tax. With the Earned Income Tax Credit, a family's tax liability is reduced and the remainder is returned to the family as a refund. In California, refundability assumes more importance as the state's personal income tax threshold, or the income level at which families must pay higher taxes. For example, in 2000, a married couple with 2 children has no state income tax liability if they earned less than $39,790. A single mother of 1 child has no state tax liability unless her earnings exceed $32,041.50. A nonrefundable credit therefore offers little or no relief to most California families qualifying for the federal Earned Income Tax Credit. Even without income tax liability, families still must pay payroll and sales taxes. In California, the poorest 20% of families pay the highest percentage of their income in state and local taxes. The state Earned Income Tax Credit together with the federal Earned Income Tax Credit increases earnings of low-income families. The California minimum wage is $6.25 per hour, but a family of three with one full-time minimum-wage worker stills falls below poverty level. The only way out of poverty for these families is the combination of the state and federal Earned Income Tax Credits. The state credits are 15% of the federal credit, and a maximum of $583 per year can be provided to a family with more than 1 child and a maximum of $353 per year for a family with only 1 child. How Do Families Use Their Earned Income Tax Credit Help? The Earned Income Tax Credit is used by families for major expenses like education and housing investments to improve economic well-being. One study found that more than half the families surveyed used the credit for furniture or appliance purchases, and a substantial percentage used it for a car or a down payment on a home. Other research found that payment of outstanding bills was the most common use of the Earned Income Tax Credits, with 1 out of 6 people spending on tuition and educational expenses. Both surveys found that many people saved at least a portion of the credit for major investments and emergencies. With state Earned Income Tax Credit Help, the working poor can approach self-sufficiency through tax relief. The Earned Income Tax Credit makes a huge difference for families, helping them leave welfare and make major purchases to boost their long-term economic well-being. As part of a comprehensive antipoverty strategy, state Earned Income Tax Credits boost the incomes of millions of low-income workers. |
|
| ------------------------ |
|---|
|
|
| ------------------------ |
|---|
|
|
|
|
| ------------------------ |
|---|
|
| ------------------------ |
|---|
Custom Search
|
| ------------------------ |
|---|
|
|
| ------------------------ |
|---|
Consumer Alerts | About | Bookmark Us | Contact | Espanol | Privacy Statement | Copyright | Terms & Conditions | Financial Widgets | SiteMap
Copyright © 2006 Credit Loan, LLC. 235 APOLLO BEACH BLVD, STE 218 Apollo Beach, Florida 33572 All rights reserved.
Disclaimer: The content provided on CreditLoan.com is for informational purposes only; do not make any financial decisions based on its content. Financial decisions are personal, based on an individual's situation. Consult with a financial professional before making any financial decisions. CreditLoan.com is not liable for your financial actions.
