January 26 is this year’s Earned Income Tax Credit Awareness Day. Awareness is important to the success of this program, for both the families and the communities it serves. As a tax attorney and Connecticut’s representative to the IRS Taxpayer Advocacy Panel, I want to share information about the importance of the EITC.
Congress enacted the EITC in 1975 to offset the impact of Social Security taxes on low-income families and encourage low-income families to seek employment rather than public assistance. The credit was also meant to encourage economic growth in the face of a recession and rising food and energy prices. The program, by every measure, has been successful.
President Reagan called the Tax Reform Act of 1986, which expanded the EITC, “the best anti-poverty, the best pro-family, the best job creation measure ever to come out of Congress.”
Last year, nationally, over 27 million workers and families received over $67 billion in EITC. People generally spend their refunds from the IRS locally, so their communities benefit as well. For Connecticut, the EITC adds about $551 million to the economy annually.
Every year, in every state, though, about a fifth of the eligible taxpayers do not apply for the credit. Our research indicates that many people are simply unaware of either the existence of the credit or that they may qualify for it. I encourage Connecticut residents to visit the IRS website www.irs.gov, visit your local library, or area IRS office for more information about the EITC.
Dan Smolnik, an attorney from Hamden, is on the IRS Taxpayer Advocacy Panel.