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.
MORE: Dayton board says no to new housing in former illegal hotel
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 city of Dayton offers free tax-preparation services at sites across the city. IRS-trained volunteers help Earned Income Tax Credit-eligible workers file their tax forms at no cost.
Dayton’s EITC Coalition also operates sites in some other communities, including Trotwood, Xenia, Fairborn and Miamisburg.
Taxpayers earning up to $55,952 may qualify for free tax return preparation even if they are not claiming the credit.
In filing season 2019 (tax year 2018), the Dayton coalition’s 13 sites prepared 6,833 returns generating more than $8 million in federal refunds, including nearly $2.1 million in earned income and child tax credits, said Jackson, Dayton’s community engagement supervisor.
More than 93 volunteers spent more than 7,960 hours helping lower-income working families, individuals and the elderly prepare and file their taxes, Jackson said.
Tax refunds, boosted by the Earned Income Tax Credit, provide critical funds that Dayton residents and families use for needs like rent, house payments, utility bills, property taxes, paying off debt, especially after the holiday season, and household purchases like new washers, dryers and refrigerators, Jackson said.
EITC “brings money back into the community,” Jackson said.
Dayton this year has about 167 volunteers who help prepare returns at the free tax-preparation sites, which can save each tax filer $270 or more, Jackson said.
On Saturday, volunteers at the Job Center helped prepare and submit 79 returns.
Filing taxes can be confusing and stressful, and tax filers usually fill out a multi-part questionnaire to determine if they qualify for the Earned Income Tax Credit, said Gary Dowdy, 63, an engineer who volunteers at the free tax assistance center.
Dowdy said tax forms are filled with “tax speak,” and people not familiar with the terms and language definitely can make mistakes.
“If you put a no where there should have been a yes, you don’t get the credit,” he said. “If you leave it blank, you don’t get it, and if you don’t answer it correctly, you don’t get it.”
Dowdy volunteers a couple days each week from January until Tax Day, April 15, to help local residents prepare and file their returns.
Teresa Rainey, 58, of Dayton, visited a free tax assistance center for the first time on Saturday.
Until now, she said she always paid for tax-filing services, at a cost of about $200 per visit.
She said she learned about the free service from the IRS.
She said she also could have used a free online filing service, but she was nervous about making a mistake and having to pay some kind of consequence. Rainey has never done her taxes on her own.
“I don’t want to take that chance,” she said.
Claire Vogel, a University of Dayton student who helped Rainey file her taxes, said filing taxes isn’t easy.
“It can get confusing,” she said. “There’s things I have to ask the other volunteers to double check, to make sure I’m getting it correct.”
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
People living in rural areas
People with earnings below the filing requirement
People who have disabilities or are raising children with disabilities