Tax Credits Help Working Families Make Ends Meet Free Help Completing Tax Forms Available Statewide

Oregonians are beginning to receive their W-2 forms from their employers and tax forms from the state and federal revenue agencies, marking the beginning of another tax season. As Oregon families start to think about preparing their tax returns, the Oregon Center for Public Policy (OCPP) is distributing flyers to make sure low-income working taxpayers know about important tax credits and about ways to get their taxes done for free.

Both the federal and state governments offer tax credits for low income working families to help them offset taxes or child care expenses. In addition, AARP runs “Tax-Aide” sites throughout Oregon where taxpayers can have their taxes done for free by trained volunteers.

“Taken together these credits put millions of dollars back into the pockets of low-income, working families in Oregon,” said John Lewis, administrator of the Oregon Center for Public Policy. “This helps families make ends meet, and gives a boost to Oregon’s economy.”

The federal Earned Income Credit (EIC) is the largest tax credit. It provides up to $4,140 to families with income earned from work. The actual size of the credit depends on family size and income. Even if a family has no tax liability, the family can get money back from the EIC, as well as from the federal Additional Child Tax Credit.

“Even families who do not earn enough money to have to file taxes, ought to,” suggests Lewis. “These families may still qualify for the federal credits. That could mean significant money to pay the rent or put food on the table.”

Oregon provides working families with a state Earned Income Credit equal to 5 percent of the federal EIC, and the Working Family Child Care Credit, worth up to 40 percent of out-of-pocket child care expenses. Both of these credits are “non-refundable,” meaning that taxpayers will not get back more than they owe in taxes.

The Working Family Child Care Credit, however, will become refundable beginning in 2003 (for tax returns filed in 2004). “We hope people will get in the habit of determining the value of their child care credit,” Lewis said. “When the Working Family Credit becomes refundable many families will be receiving significant, additional relief from expensive but necessary child care.”

Free help preparing state and federal tax returns is available from AARP and IRS sponsored “Tax-Aide” sites throughout Oregon. Trained volunteers are available to answer questions, help prepare tax returns, and in some locations even file the taxes electronically (“e-file”). E-filing can speed up refund checks.

“Low-income families do not need to pay someone to do their taxes,” said Lewis. Taxpayers can find Tax Aide sites by calling 1-888-227-7669 (AARPNOW) or by calling the IRS at 1-800-829-1040.

Many families may also qualify for “Free File,” a new IRS program offering online tax filing to many low-income taxpayers.

In addition to helping low-income working families, the federal Earned Income Credit provides significant economic benefits to the state. In 2001 the federal credit returned $300 million to Oregon. According to Lewis it is one of the biggest federal transfer payments into the state. By contrast, the state receives only about $169 million in federal welfare funds each year. “All the federal EIC dollars get into the hands of working families who tend to spend the money in Oregon,” said Lewis.

“Every family who qualifies should be applying for these credits,” said Lewis. “No hard-working, low-income family should miss out on this opportunity.”

For organizations wishing to help inform families about these credits more information is available on their website: EITC Resources Page or by contacting John Lewis at jlewis@ocpp.org or 503-873-1201.

For questions about federal taxes or to find the location of a Tax-Aide site contact the IRS at 1-800-829-1040. For questions about state taxes contact the Oregon Department of Revenue at 1-800-356-4222.

The Oregon Center for Public Policy is a Silverton, Oregon-based non-profit research institute that uses research and analysis to advance policies and practices that improve the economic and social prospects of low- and moderate-income Oregonians, the majority of Oregonians.

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