WOONSOCKET — Tax season is here and Community Action Rhode Island wants working families to know they can receive help with the preparation of their tax returns and applications for federal income tax credits.
In fact, low income families may be eligible for tax credit refunds averaging $2,100 per filer and as much as $5,666 per filer under the federal Earned Income Tax Credit guidelines.
The federal assistance is only available to qualified wage earners submitting federal tax forms and so on Friday the Rhode Island Community Action Association and its sponsoring agencies joined U.S. Sen. Sheldon Whitehouse, U.S. Rep. David Cicilline and R.I. General Treasurer Gina Raimondo at the Museum of Work and Culture to kick off an awareness campaign encouraging greater public participation in the Earned Income Tax Credit program.
Even if low-income working Rhode Islanders only take advantage of the state’s free “Volunteer Income Tax Assistance” program to complete their tax returns, they will be adding money to their income at a time when every bit helps, according to Paula McFarland, executive director of Rhode Island Community Action.
And if they choose to apply for the Earned Income Tax Credits, Rhode Island’s working families could have an even bigger impact on helping the state’s economy rebound.
Last year the Community Action tax preparation centers helped Rhode Islanders identify tax deductions, helping them to put total of $6.6 million in refunds back into their pockets. Taking advantage of the income credit program can provide a family with added money to “put food on the table, pay fuel bills, obtain transportation, child care, invest in education,” or even to save for the future, McFarland said.
Rhode Island Community Action, an association of eight community action agencies around the state and including Family Resources Community Action locally, has been able to set up Volunteer Tax Assistance sites at its member organizations where working families can stop in and see if they qualify for federal tax assistance programs.
The VITA sites are operated with the help of funding from Citizens Bank and the United Way.
Ben Lessing, executive director of Family Resources, said his agency was pleased to participate in the program because of the impact it has in helping the state’s most vulnerable residents.
“It lifts people up and closes the income gap between the salaries they make and their income needs,” Lessing said.
“The other thing it does is return funding back to the community and those funds are invested in all sorts of ways,” he said.
The qualification requirements for Earned Income Tax Credits set a maximum annual income of $13,460 for a single person filing a 2010 tax return and $18,470 for a married couple filing jointly without a child.
A single-parent family with one child making not more $35,535 would qualify for tax credits as would a married couple with one child not earning more than $40,545.
The income guides are $40,363 for a single-parent family with two children, and $45,373 for a couple with two children, and $43,352 for a single-parent family with three or more children, and no more than $48,362 for a married couple with three or more children.
The credits range from $5,666 for families with three or more children to $3,050 for families with one child. A single person meeting the income guide would qualify for a $457 income tax credit.
Whitehouse told the gathering that he viewed the work by the Community Action groups to increase interest in the income tax credits as being very important to the state’s overall economy.
“The sound we are trying to send out there is that there is money to be had if Rhode Islanders will file for it,” he said.
Information provided by the federal Internal Revenue Service for 2008 showed Rhode Island got $148 million in revenue to its residents from the federal Earned Income Tax Credit program “that they could turn around and spend,” he said. “And because of the income requirements these are people who when they get the income they do spend it and it goes right back into the economy,” he said. “It begins to feed the multiplier effect that we need to have our economy to continue to expand and grow so we can get our jobs back,” Whitehouse added.
Whitehouse said the state is now reported to be collecting up to $160 million in Earned Income Tax Credits and that is “a big hit for Rhode Island.”
Even with such growth in the federal income support program, as much as $40 million in potential credits are not being applied for by wage earners in the state because they may not have heard about the program, he said.
“As far as I can tell, $40 million pumped into the R.I. economy through people who are virtually certain to spend it and quickly, right here in our R.I economy, is something worth making some noise about,” Whitehouse said.
Cicilline noted that Friday’s gathering was the first of its kind that he had attended in Woonsocket but added he has supported the launch of the tax credit drive in his past role as Mayor of Providence for the past eight years in that community.
“I’m happy to be here in Woonsocket to help launch this as well,” he said of this year’s awareness effort. Given the importance of the income tax credits to low income families, Cicilline said he believes the federal government should consider awarding them automatically to qualifying families without the need to file an application. “It’s pretty easy to determine if people are eligible, and this is something that is really critical that obviously brings resources to families most in need,” he said.
The U.S. Representative said he agreed with Whitehouse that the money the program brings in “gets spent again right at the community level buying food and buying clothing and for basic needs,” that help Rhode Island families.
Raimondo said she had thought about the work the community action groups do earlier in the day when she was dropping her daughter off at school in Providence. Looking around at the other parents bringing their children to school bundled in their coats, hats and gloves, Raimondo said it struck her that providing those basic necessities can be difficult for a young, working family.
“Because of the work you do, which isn’t always easy,” Raimondo told the gathered volunteers and community action staff members, “there are families out there that have $1,000 or $2,000 extra a year to spend on those things, on the extra backpack, on the extra hot lunch, whatever children might need or families might need to survive.”
Raimondo, in her position for just three weeks, said she has targeted promotion of a statewide financial literacy initiative as an early goal for her office and commended the community action coalition for providing a similar service with its volunteer income tax preparation and Earned Income Tax Credit work.
The kickoff also drew support from Ned Handy, president of Citizens Bank, Rhode Island, and Anthony Maione, President and CEO of United Way Rhode Island.
Mayor Leo T. Fontaine, was also scheduled to join the group but had been called away to an emergency in the city, Lessing said.
Frederick McElligott, Area 1 director of the IRS, said that just going into one of the volunteer income tax assistance program centers could give residents information on a significant amount of tax credit assistance. One couple he spoke with about their participation in the program told him that they had qualified for several tax credit programs, including the earned income tax credit and the first time buyer program for new homeowners, and as a result they were able to purchase their first home.
For more information on the Rhode Island Community Action Association’s programs go to www.ricommunityaction.org , or call the toll free number, 2-1-1 for information on all tax preparation site locations offered by Community Action.