The Earned Income Tax Credit is “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” - President Ronald Reagan, 1986
It’s tax time and families are busy getting doing their taxes or paying someone else to do them. Many people are visiting the free tax preparation sites operated by Community Action Duluth, AARP, CHUM and UMD and volunteers are busy assisting low and moderate income people to file their taxes and claim their refunds. A large number of our tax site customers are eligible for the Earned Income Tax Credit (EITC) and the MN Working Family Credit (WFC). These credits increase the prosperity of Duluth and For the lowest wage workers, it can transform the earnings of a $7.00 an hour job into a $9.00 an hour job. The Earned Income Credit provides a significant tax break to low- to moderate-wage workers, which makes it one of the most effective weapons in the battle against child poverty in America. During the 2005 tax season, over 12 percent of all Duluth taxpayers claimed this credit. The total value of the Earned Income Tax Credit and the MN Working Family Credit to Duluthians was over $9 million dollars last year.
Many people are not aware that they are eligible to claim these refunds. Some low income people do not earn enough income to be required to pay taxes, however they might be eligible to claim a refund. For example a single parent with two children who is transitioning off of public assistance and earned $3,000 in 2007 may be eligible for a $1,200 EITC.
The EITC and MN Working Family Credit are only available to people with earned income from working. However, the powerful effect of these credits can be eroded in several ways. In 2005, more than $366,240 million of the federal EITC funds claimed in Duluth were spent on tax preparation and filing costs, rather than on meeting working families’ basic needs and stabilizing their households. An additional $113,200 was spent by these Duluthians for high interest Refund Anticipation Loans (RAL) also called instant refunds. RALs are extremely short-term loans that use the family’s anticipated tax refund as collateral.
Community Action Duluth offers free Express Refunds now in partnership with Northern Communities Credit Union to help families keep all of their hard earned refund. Families and individuals who come to the Community Action Duluth free tax sites can save up to $400 in fees and interest on an Express Refund Loan. Our tax site customers open a savings account with Northern Communites Credit Union while they get their taxes done. In most cases, the federal part of their refund is available the next day from the credit union at no cost to the customer.
The free tax sites were designed to give low and moderate income people an alternative to expensive tax preparation fees and high interest loans. The times and hours of the free sites are below. Both sites serve individuals and families with less than $39,000 income for 2007. The Community Action Duluth sites do e-filing and, in most cases, people have their refunds within 5 - 10 days.
Community Action Duluth – Tuesday evenings 5:00 to9:00 pm and Saturdays 9:00 a.m. to 1:00 p.m. 19 N. 21st Ave. W.
For people with dependents only – Wednesdays from 3:00 to 8:00 p.m. at Memorial Park – 5315 Grand Ave.
Appointments are available at this site only by calling (218) 726-1665.
Also at this site only – child care and a free credit report from LSS Financial Services.
For more info on additional free tax sites in Duluth call – 211 for times, dates and locations.
Written by Angie Miller Associate Director at Community Action Duluth