EIC Puts Extra Cash in Pockets of Low-Income Workers

Date: Jan. 23, 1997
Editor: D'Lyn Ford  (505) 646-6528, dlford@nmsu.edu

LAS CRUCES -- Although many low-income workers take advantage of the earned income credit or EIC each year, hundreds of thousands more still are unaware that they qualify for this tax benefit, said a New Mexico State University consumer education specialist.

"The Earned Income Credit is a special fund set up to help working families -- low-income workers who file or owe federal income tax," said Susan Wright with NMSU's Cooperative Extension Service. It can reduce or eliminate the tax that they owe, and some workers may even get money back.

The amount of income credit each family receives is based on the size of the family and how much money they earned in 1996, Wright said. Those eligible for the EIC are workers who earned less than $9,500 and do not have any qualifying children; families with one child who earned less than $25,078; and families with two or more children who earned less than $28,495.

"This tax benefit has been in place for several years," she said. "In the beginning, only a few people knew about the EIC and claimed it. As we get the word out, more and more New Mexico families are taking advantage of this policy."

The earned income credit also features an option for advanced payment, Wright said. This option allows an employer to deduct money from the amount of taxes a worker will pay and leave it in the salary to increase the employee's take-home pay.

When people who receive money under the advance payment option lose or quit their jobs, they may have to pay money back, she said. "So, be careful about claiming this option if you're not certain your job is secure."

Wright said New Mexicans can find out if they qualify for the earned income credit or other benefits by checking with their employers.