Have you earned the Earned Income Tax Credit?

The more complicated the financial world gets, the more the average person tends to get victimized, not merely by the unscrupulous and predatory but by our own ignorance, while others, who make a hobby of knowing all the rules, game the system for all its worth. This applies to the tax code, too, because it's as complicated as the rest of the financial world, and I've heard stories from tax preparers and IRS personnel alike of people who think they're gaming the system with their nickel and dime tax fraud while leaving bigger money on the table that they actually qualify for. And then there is the Earned Income Tax Credit. The Council for Native Hawaiian Advancement, recognizing that many Hawaiians have low enough taxable income to qualify for the credit, is spreading the word Friday about its availability. On behalf of my son and daughter who are part-Hawaiian I'm happy to pitch in. The Earned Income Tax Credit and Child Tax Credit apply to single filers or families who have less than $38,646 taxable income. See what I mean about complexity? Who worked this up so it would be $38,646 instead of $40,000? How do you spread the word about something for which the cutoff is $38,646? But I digress. With one child the credit can be as much as $2,917 -- with two or more keiki, up to $4,824. If you owe $1,000 on your taxes, and you qualify for $4,824, the tax service sends you $3,824. Really. You can wind up paying negative taxes, getting money instead of paying it. For more information you can call 596-8155 or 800-709-2642 and ask for Rosalee Puaoi. If you're not Hawaiian and don't want to burden the council with your questions, see a tax preparer. This money was appropriated to aid lower income families.

Comments

[Rae]

According to what you wrote-does this tax credit only pertain to people with part Hawaiian? Or would this apply to people in general that make less than the $38,646? [Yes. The Hawaiian angle is merely that the council is calling attention to the credit because it suspects a large percentage of Hawaiians qualify, based on what is known about the percentage of Hawaiians living below the poverty line. HMD]

[Azure]

Aloha Howard,
Thanks for the information we really appreciate it.

[Ron]

There is a controversial aspect to the Earned Income Tax Credit that isn't really discussed much outside of accounting or law circles. Some [see it as] nothing more than social welfare-- the reason being that most people who qualify for the EITC do not pay taxes to begin with. The EITC is seen as heavily subsidizing low income earners (who generally don't pay taxes), but not middle class earners (who are more likely to have to pay taxes). But on the other hand, the EITC is credited as being one of the nation's largest anti-poverty programs.

I guess your political leanings will determine if you think the EITC is a good thing.