Don't Leave Those Low-Income Tax Credits on the Table

1040 tax forms are plentiful around this time of year. (Tim Boyle/Getty Images)

When Guadalupe Villegas filed her taxes recently she received a pleasant surprise: a refund of more than $6,000 thanks to the state and federal earned income tax credits.

"I got so excited, because I needed some extra help," said Villegas, a single mother of two who lives in South Los Angeles. "It was the first time I had heard about it.”

Villegas found out about the credit only because she received assistance from the Koreatown Youth and Community Center's Volunteer Income Tax Assistance Program, which is sponsored by a Los Angeles County initiative to educate low-income residents about the tax credit. 

L.A. County says nearly $600 million in federal earned income tax credits go unclaimed each year. And a lot of people are leaving the state version of the tax credit on the table as well.

California introduced a state earned income credit for the 2015 tax year; it went unclaimed by about 40 percent of eligible L.A. County filers. This year's participation is on track to be worse. According to the most recent state statistics, 5 percent fewer Californians have taken advantage of the state tax credit on their 2016 tax returns.

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Villegas used the money she got to help pay rent on a new apartment and to buy furniture, a microwave and a TV.

"It helped get me on my feet," she said.

Many low-income residents don't file taxes because they don't know about the earned income tax credit, or that they could get money back that has been withheld by their employers, according to Audrey Casillas, economic development specialist at the Koreatown Youth and Community Center.

She said some people who have received tax credits after using a paid tax preparer wrongly assume that they got the money because the preparer was doing them a favor.

"We really want to try to get EITC to be a household name," Casillas said.

Single residents making less than $14,880 a year qualify for a $506 federal credit. A taxpayer who makes less than $39,296 per year with one dependent qualifies for $3,373.

To get up to a $217 state credit, a single Californian with no children must earn less than $6,717 per year. A parent with two children earning less than $14,161 can get a state credit of up to $2,406.

This year's tax filing deadline is April 18.

The city and county of L.A. sponsor Free Tax Prep Los Angeles, which provides free tax preparation help to qualified individuals at nearly two dozen locations. Its website also has an earned income tax credit calculator.

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