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Tax credit available for state's working poor

Posted: Sunday, February 06, 2005

ANCHORAGE (AP) — Alaska has the lowest participation rate in the nation among people eligible for an Internal Revenue Service-administered program for the working poor.

Nationally, about 75 percent of eligible people claim the earned income tax credit.

In Alaska, it's less than 56 percent, said David Williams, director of the IRS' national EITC program office.

''There are a lot of people across your state who don't claim the credit,'' Williams said. ''We want to encourage people who work but don't make a lot of money to explore whether they are actually eligible.''

There may be lots of reasons why people don't claim the earned income tax credit. The eligibility requirements for the anti-poverty program are confusing, and some people who are eligible have incomes so low they don't file a tax return, Williams said. There are also misconceptions about eligibility, he said.

In Alaska, the low participation rate is probably because the eligible population is so scattered in remote areas, Williams said.

Reasons vary from state to state. In Rhode Island, for example, the problem is be-lieved to be one of limited English proficiency among eligible people. Rhode Island has the second-lowest participation rate at just over 62 percent of eligible workers.

The earned income tax credit is available to childless workers and workers with children.

The income ceiling is $35,458 for a married couple filing a tax return jointly with two or more qualifying children.

The maximum available credit is $390 for a worker without children. The maximum credit for a family of four is $4,300.

''The whole idea is you've got to have a job,'' Williams said. ''You've got to earn it.''

Mothers with two children are the most likely to claim the credit — about 95 percent of the eligible file. Childless workers are the least likely to file, with a participation rate of 40 percent to 50 percent, he said.

''Don't guess whether you qualify for it,'' Williams said.

On its Web site, the IRS has an EITC Assistant — a simple questionnaire to help people and their tax preparers determine if they're eligible.

In the 2002 tax year, 36,315 people in Alaska filed for the credit, or 55.6 percent of those eligible, for a total of nearly $54 million.

Nationally, the $38 billion program serves more than 22 million people annually.

People also are encouraged to talk to their tax preparers or visit one of several IRS tax aid sites in Alaska — including Ketchikan, Nome, Anchorage and Fairbanks — many of which open this month.

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On the Net:

www.irs.gov



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