Community Development Division

Mayor Paul Soglin cautioned today that thousands of low-wage workers in Madison risk forfeiting millions of dollars in tax benefits owed to them this year for no other reason than that they fail to ask for it. Soglin urged residents to take advantage of the Earned Income Tax Credit (EITC), a federal tax benefit designed to supplement the incomes of low-wage workers.

"This credit can provide real help for working families in meeting current spending needs for rent, utilities, car repairs, child care, or saving for future needs," said the Mayor.

The EITC is one of the nation’s largest and most effective anti-poverty programs. It is available to families earning as much as $47,000, depending on the number of children in the household. The amount of the credit also varies with the number of children and can reach as high as $6,143. (See the table below for a summary of benefits.) Still, the IRS estimates that nearly one-fifth of eligible people continue to miss the EITC benefit because they do not know about it, do not realize they are eligible, or do not know how to claim it.

That need not be the case for residents in Madison, according to the Mayor, because there is free assistance available to help them claim this benefit. He noted that, each year, many families might gain eligibility for the benefit for the first time without realizing it because they begin working, change their marital status or have children. Moreover, in many cases, people make the mistake of passing up the credit because they do not earn enough income to have to file a tax return.

"What some families misunderstand," said Soglin, "is that this is a refundable credit. Even if you are not required to file a tax return, because you did not earn enough income or do not owe any taxes, you may still qualify for this benefit. But if you don’t file a tax return and claim the credit, you won’t get the refund."

The Mayor has frequently spoken of the EITC as a valuable tool in helping to lift children and families out of poverty. He urged any family that needs help in claiming the credit to make use of free tax preparation assistance that is available throughout the city.

"Madison has a strong network of skilled organizations and volunteers who can help families understand if they are eligible for the benefit and take the steps necessary to claim it. There is absolutely no charge for this help."

Free tax assistance is available at the Richard Dilley Tax Center located in the Villager Mall, at 2300 South Park Street. This volunteer site, provided through a partnership between the Dane County UW-Extension Financial Education Center and AARP, is open every Monday, Wednesday, and Saturday through April 15, without appointment. Help is also available from trained volunteers at Volunteer Income Tax Assistance (VITA) sites throughout Madison, including the Senior Center, the Central Library, and several library branches. A complete list of all locations offering free tax preparation is included on the attached brochure. The information can also be accessed by contacting 2-1-1 or the Dane County UW-Extension Financial Education Center at (608) 261-5077, or by using their Website: http://dane.uwex.edu/family-living/financial-education-center/

Mayor Soglin asked for help from employers in the Madison area to help get the word out about the EITC to their employees, customers and clients. "Let’s do everything we can to make sure that all eligible, hard working families in Madison receive the full benefits of their labors."

EITC TABLE

The EITC credit varies depending on the amount of earned income and the number of dependent children in the taxpayer’s household. The maximum credit for 2014 is:

•  $6,143 for a household with three or more children and earned income up to $46,997
•  $5,460 for a household with two children and income up to $43,756
•  $3,305 for a household with one child and income up to $38,511
•  $496 for a household with no children and income up to $14,590

The State of Wisconsin provides an additional credit to families with children that qualify for the federal EITC. The State credit adds up to $1,950 for a household with three or more children, up to $635 with two children and up to $110 for a household with one child.