Underused tax credit could pay off

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About 330 Routt County residents are missing out on receiving money -- anywhere from a few hundred to a few thousand dollars -- from the Internal Revenue Service each year.

Those residents also fall in the low-income category, so the extra funds would be especially helpful, Routt County Treasurer Jeanne Whiddon said.

The money would come from the earned income tax credit, a credit that has been part of the federal tax code for about 30 years and is the most claimed credit on income tax returns. Still, many low-income workers do not know they qualify for the tax or how to claim it.

For Routt County, about 2,600 households qualify as low-income, according to IRS data. The IRS estimates that 15 percent of qualifying people do not claim the credit.

The average qualifying person in Colorado receives $1,530 a year for the credit.

In this county, that amounts to about $500,000 that goes unclaimed each year.

The tax credit is meant to acknowledge that low-income people -- including individuals, families with children and the elderly -- live in a community, and even if they don't pay income taxes, they often do pay sales taxes or property taxes, Whiddon said.

It was installed by Congress as an anti-poverty measure, said Jean Carl, spokeswoman for the IRS.

"This gives them an opportunity to file tax returns legally. ... And they get a little bit of extra money back to help keep the poverty level away," Carl said.

She said that because the eligible income levels are so low, "these people really do need the help."

For 2002, earned income must be less than $33,178 for a person with more than one qualifying child, $29,201 for a person with one qualifying child, and $11,060 for a person without a qualifying child, according to eligibility guidelines.

Money received through the credit is counted as unearned income, so it won't affect assistance people may receive from other human services programs, Whiddon said.

Applying for the assistance can be easy, she said; people can look online or go to IRS assistance locations.

"I just want to encourage them, if they don't know whether they qualify, to at least find out because it certainly would be worth it to receive anywhere from hundreds of dollars to $1,500," Whiddon said.

Beside helping individual residents, the tax also has a positive impact on the community, as the money that people receive is then spent within the area.

"It could mean a lot to rural Colorado if counties like Routt County are having this trickle down," she said. "They're going to turn around and spend that money, hopefully some of it locally."

For more information, go to www.irs.com or call the IRS toll free at 1-800-829-1040.

-- To reach Susan Bacon, call 871-4203

or e-mail sbacon@steamboatpilot.com

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