Many working Kansans with low incomes are eligible for significant benefits under the Earned Income Tax Credit program. Because the Kansas Department of Social and Rehabilitation Services works with clients eligible for public assistance due to poverty, the agency is actively informing its clients they may be eligible for federal tax benefits of up to $2,528.

The Earned Income Tax Credit (EIC) is a refundable credit. Eligible families owing no income tax receive a check from the Internal Revenue Service in the amount of their credit. For families owing income tax, the EIC reduces the amount owed. If the family or individual tax credit through the EIC is greater than the amount of taxes owed, the tax bill is reduced to zero and the Internal Revenue Service will send the family a check for the remainder of the EIC.

The Earned Income Tax Credit is a significant benefit to Kansas families with low incomes and Kansans who receive public assistance," said Janet Schalansky, Acting SRS Secretary. Families living close to the edge in terms of making ends meet should take advantage of the program."

The U.S. Congress has made some notable changes in the Earned Income Tax Credit Program for federal tax year 1994 which substantially increase the benefits available to many people. Families can qualify for much higher benefits based solely on their income and caring for a child. Families no longer have to qualify for additional credits for providing

health insurance for children or for having a child born during the tax year in order to receive higher amounts. Another change is low-income individuals without children can now qualify for a benefit.

Based on tax year 1994, the following income limits and benefit maximums apply:

*Workers who were raising one child in their home during tax year 1994 and had family income of less than $23,775 can get Earned Income Credit of up to $2,038.

*Workers who were raising more than one child in their home during tax year 1994 and had family income of less than $25,296 can get an Earned Income Credit of up to $2,528.

*Workers who were not raising children in their home but were between ages 25 and 64 on December 31, 1994 and had income below $9,000 can get an Earned Income Credit of up to $306.

For SRS clients, the Earned Income Credit is exempt both as income and as a resource for cash, medical assistance, and food stamps, although for food stamps the exemption as a resource lasts only through the month after receipt. EIC is also exempt as income for Social Security Income, Low Income Energy Assistance, and public or subsidized housing.

All recipients of SRS public assistance programs received information in both English and Spanish about EIC with their monthly benefits. Area and local SRS offices also are displaying and distributing information about the program.

Candy Shively, SRS Commissioner of Income Support and Medical Services, said it is important to get the word out.

Many people on public assistance work at low-paying jobs," she said. EIC gives them the chance to get ahead and possibly take another step toward independence and self-sufficiency."

To get EIC, a family must file an IRS return using form 1040 or 1040A (not the 1040EZ) plus a "Schedule EIC." Even families who would not otherwise have to file a return must do so in order to receive EIC. For families who may already have filed this year, an amended return with Schedule EIC would be necessary to receive the EIC benefit. Persons can also file for retroactive EIC payments for tax year 1991, 1992 and 1993.

Qualifying adults without children may receive EIC by filing form 1040, 1040A or 1040 EZ and writing EIC"on the Earned Income Credit" line on the tax form.

Workers caring for a child or children can also elect to receive EIC advance payments to increase their take home pay through current employment. Up to $105 a month extra is available through this option. The

benefit is begun by filing a W-5 form with their employer who is required by law to provide the EIC advance payment to eligible employees.

Employees receiving the advance payments at the end of 1994 must file a new W-5 to start or continue payments in 1995.

Employers can also benefit from promoting the EIC advance payment option. It allows them to increase employees' take-home pay at virtually no cost to the business.

Further information about EIC can be obtained from the Internal Revenue Services by calling 1-800-829-1040. For written telephone access (TTY/TT/ TDD), call 1-800-829-4059.

Page Last Updated: May 29, 2001