Tuesday, February 19, 2019

Are You One of the 380,000 Taxpayers Missing Out on Billions in Tax Credits?

 
The New York State Department of Taxation and Finance today reminded New York State taxpayers to check their eligibility for earned income tax credits (EITCs). As some of the most valuable tax credits, EITCs can significantly reduce the amount of taxes owed or provide a substantial refund to low- or middle-income workers and families.

EITCs are refundable federal, New York State, and New York City credits for working taxpayers. For tax year 2018, the maximum total of federal, state, and New York City EITCs is $8,682 (for a family with three children). Income eligibility requirements are shown in the chart attached.

“As its name implies, you’ve earned this potentially substantial cash windfall by working,” said Acting Commissioner Nonie Manion, “so please review your eligibility and claim the credit you’re due.”

In tax year 2016, almost 1.8 million New Yorkers received the federal EITC. When the federal, New York State, and New York City benefits were combined, the benefit to working families and individuals was more than $5.2 billion, with an average benefit of almost $2,950 per household.

To view regional EITC data, visit Earned Income Tax Credits: Tax year 2016 Data.

Check eligibility requirements each year

Each year, thousands of New Yorkers qualify for the EITC for the first time as their filing status or personal financial situation changes. The IRS estimates that nearly 380,000 eligible New Yorkers fail to claim these valuable credits.

In addition to the specific income requirements, taxpayers must meet other criteria such as:earn wages from employment or self-employment; have a valid Social Security number; have a qualifying child living with them for more than half the year, or, if they don’t have a qualifying child, be at least 25 years of age and under age 65; and have investment income of less than $3,500.

Taxpayers must also file a tax return, even if they don’t owe any tax or aren’t otherwise required to file. Those eligible who prepare their returns electronically will be automatically prompted to claim this credit and others. Those who were eligible in previous years, but didn’t claim the credit, may still be able to submit an amended income tax return for up to three years.

The Tax Department also reminded those ineligible for EITC benefits to look for other possible tax credits that they might be eligible to claim, such as the child and dependent care credit.

Noncustodial parent earned income tax credit

In 2006, New York State became the first state in the nation to enact a noncustodial parent EITC. The refundable credit is one of the many ways the state encourages low-income noncustodial parents to work and stay current with their child support payments.

In 2016, almost 5,200 taxpayers claimed the noncustodial parent EITC, totaling almost $2.6 million in taxpayer benefits.

Visit the following for additional information.

Federal Earned Income Tax Credit
New York State Earned Income Tax Credit
Recordkeeping suggestions for self-employed persons
 
Source: The New York State Department of Taxation and Finance

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