Tax break many don't take advantage of

March 30, 2012 12:00:00 AM PDT
A federal tax credit for low income workers can put thousands of dollars into the pockets of the nation's neediest families. Yet 1 in 5 eligible families never claim their money. 7 On Your Side would like to point out this free service to help people collect that cash.

Millions of families earning less than $50,000 a year may qualify for the earned income tax credit. And yet an estimated $1.2 billion goes unclaimed each year. What's more, most low income families are paying to have their taxes prepared, when they can get professional help for free.

It's the middle of the day and the room is barely filled at a free tax clinic in San Francisco. There are moms with kids, and singles on fixed incomes.

"When I found out it's free I was thinking, 'Wow, I might as well give it a try,'" said Alfredo Hurtado, a San Francisco resident.

Hurtado is struggling to get by and expecting his first child. He was glad to have his taxes done for free and learned he might get a nice tax refund.

"Yeah, I could use some of the money to buy some diapers," said Hurtado.

The free clinic at San Francisco's Homeless Prenatal Center is just one of 200 free tax preparation centers set up by United Way all around the Bay Area. About a quarter million workers qualify for free help, but only about five percent used it.

"The rest of the people paid somehow," said Kelly Batson of United Way.

Batson says more than 60 percent of low wage earners wind up paying up to $300 for tax preparation, when they could take advantage of this free service.

"You think if it's free, it's not high quality, when our free services are really high quality. We work with the IRS, we are trained and certified by the IRS," said Batson.

The program is 10 years old, but folks like Alberto Sandoval of San Francisco said they just learned of it this year.

"This is my first time coming here and they were really nice and very professional," said Sandoval.

Many of these clients also qualify for a potentially large refund using the federal earned income tax credit. Workers earning less than $50,000 a year may qualify. The tax credits range from about $460 to $5,700, depending on size of their families and income. Eligible workers get the money even if you don't owe taxes.

However, 1 in 5, who are eligible, don't even apply for the credit. In the Bay Area alone, an estimated $80 million goes unclaimed each year.

"Families that can't make ends meet need that extra money in their pocket. Even if it's just a couple hundred dollars in credit, or up to several thousand, they need that. It pays for child care, health care, transportation, food, rent," said Batson.

"Wow. No, I don't know nothing about that, but I hope I qualify for it," said Hurtado.

Just a heads up, you can get your tax questions answered this coming Tuesday for free. The 7 On Your Side tax chat and hotline will be available this Tuesday from 4:30 p.m. to 8 p.m. More than a dozen tax experts will be at the ABC7 studios to answer your questions over the phone or online. We will also have someone here who can answer your questions in a variety of languages.

For more information, you can contact the United Way: Earn It, Keep It, Save It or call 211.

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