For tax year 2017, about 931,260 working Ohioans claimed the Earned Income Tax Credit and received nearly $2.3 billion in reductions to their tax bills, according to Internal Revenue Service data.
The tax credit is refundable and the average credit for workers and families in the Miami Valley was about $2,430, IRS data shows.
About 117,950 tax filers in Butler, Champaign, Clark, Greene, Miami, Montgomery and Warren counties claimed the credit in tax year 2017, which had a combined value of nearly $287 million.
But the IRS estimates that one in five workers eligible for the Earned Income Tax Credit do not claim and receive it.
That could mean that nearly 30,000 workers in the Miami Valley and 233,000 statewide missed out on the incentive.
In 2017, the Earned Income Tax Credit lifted about 5.7 million people out of poverty, including 3 million children, and it also reduced the severity of poverty for nearly 20 million other people, including 7.3 million kids, according to the Center on Budget and Policy Priorities.
The tax credit rewards work and creates an incentive for low-wage workers to increase their hours, the center said.
The tax credit benefits low- and moderate-income workers, especially those with children. The credit is far larger for working parents than for workers without qualifying children.
About one-third of the Earned Income Tax Credit-eligible population turns over each year, and millions of workers will qualify for the first time this year, which makes awareness of the credit extremely important, the IRS says.
“Depending on their family status, depending on their income status, people kind of swim in and out of eligibility,” said Luis Garcia, IRS spokesperson. “From the statistical models we’ve done, about one in five is eligible but may be unaware of it.”
Tax software and tax professionals should ensure that taxpayers who qualify for the credit get it, officials say.
But some taxpayers overlook the credit or don’t claim it, fearing they might submit wrong information and could be audited or get IRS scrutiny, some experts say.
Some people who are eligible for the credit may not receive it because they aren’t filing a federal income tax return because they owe no taxes or aren’t required to file.
The tax credit has a big impact on communities, and every taxpayer who thinks they might be eligible should find out if they qualify, Garcia said.
“Be careful who you have do your taxes,” Garcia said. “It’s your money … and if you qualify for EITC, you qualify for free file.”
The credit ranges for up to $529 for low-income workers with no children to $6,557 for workers with three or more qualifying children.
Workers with no children can earn up to $15,570 to qualify, and workers with three or more children can earn up to $50,162 ($55,952 if married and filing joint taxes), the IRS says.
The state of Ohio also has an Earned Income Tax Credit that more than 768,000 returns claimed in tax year 2017, though the state credit is not refundable.
The IRS says residents at risk of overlooking the credit include:
People living in non-traditional homes, such as a grandparent raising a grandchild
People earnings declined or whose marital or parental status changed
People without children
People limited English skills
Veterans
People living in rural areas
People with earnings below the filing requirement
People who have disabilities or are raising children with disabilities
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