Many Kansans are eligible for significant benefits from a special federal tax credit for working people who earn low or moderate incomes.

The federal Earned Income Tax Credit (EIC) is a refundable credit which could provide up to $3,656 to eligible Kansans. As created by the U.S. Congress, the EIC has several important purposes: to reduce the tax burden on low-income workers, to supplement family wages, and to make work more attractive than welfare.

The Kansas Department of Social and Rehabilitation Services (SRS) works with families eligible for public assistance because of poverty. The agency is informing people they serve that they may be eligible for this federal tax benefit. With the emphasis SRS has been placing on moving people they serve from welfare to work and with federal welfare reform, the tax credit may be especially helpful for people to gain or maintain employment.

"Many people receiving public assistance work at low-paying jobs," said SRS Secretary Rochelle Chronister. "EIC gives them a chance to get ahead and take additional steps toward self-sufficiency."

Workers who qualify for the EIC and file a federal tax return can get back some or all of the federal income tax taken out of their pay during the year. They may also get extra money back from the federal government. Even workers whose earnings are too small to have paid taxes can get the EIC.

Examples of EIC payments available are as follows:

*Workers who were raising one child in their home and had family income of less than $25,760 in 1997 can get an EIC of up to $2,210.

*Workers who were raising more than one child and had family income of less than $29,290 can get an EIC of up to $3,656.

*Workers who were not raising children in their home but were between the ages of 25 and 64 on December 31, 1997 and had income below $9,770 can get an EIC of up to $332.

To get EIC, a family files and Internal Revenue Service (IRS) tax 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 an EIC. For families who may already have filed this year, an amended return with Schedule EIC is necessary to receive the EIC benefit. Persons can also file for retroactive EIC payments for tax years 1994, 1995, and 1996.

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

Workers don't have to calculate their own EIC; if they choose, the IRS will do it for them. A toll free IRS number, 1-800-829-1040, is available for additional information on procedures or requirements. For text telephone access (TTY/TT/TDD), call 1-800-829-4059.

Workers can get the EIC in one check from the IRS after they file a return. But for workers caring for a child or children, there is another choice that can be of benefit to both employers and workers all year long. It is called the ‘advance EIC payment."

Employers can add part of a worker's EIC to every paycheck, and the worker gets the rest of the credit after filing a tax return. This benefit employers because they are able to increase an employee's take-home pay at virtually no cost to the business.

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

Page Last Updated: May 29, 2001