This article's focus: Earned Income Tax Credit (EITC)

Tens of thousands of people with disabilities are losing money each year because they are either unaware or do not know how to file for an Earned Income Tax Credit (EITC)--an anti-poverty program for hard working, low-income employees

aimed at offsetting the burden of taxes, supplementing low wages, and providing an incentive to work. A qualified individual may receive a credit up to $428, a person with one qualifying child may get up to $2,853, and a family with two or more qualifying children may receive up to $4,716. Some families are barely making enough money to provide for basic support, so they should get back every penny possible. This is all money that has been earmarked for this purpose; they simply have to apply for it.

Some people might not be filing for the tax credit because they fear they'll lose needed government benefits if they receive too much of a refund. People with disabilities receiving Supplemental Security Income (SSI) or Medicaid cannot have more than $2,000 in assets or they will lose funding that affords them food, shelter and could impact health benefits. But many people don't realize that the Earned Income Tax Credit does not count as income in determining eligibility for benefits like cash assistance, Medicaid, food stamps, SSI, or public housing.

There are specific eligibility requirements to qualify for the EITC, so it is in the best interest of everyone to know how to apply for the credit. One of the eligibility requirements is an income limitation; the income limits for 2007 taxes returns are:

* < $12,590 for people with no children

* < $33,241 for people with one child

* < $37,783 for people with two or more children

Be sure to seek a professional specially trained to handle the nuances involved with planning for people with special needs. They are aware of the importance of filing taxes and can refer people who would qualify for the EITC to tax preparers for assistance free-of-charge. In addition, know that the Volunteer Income Tax Assistance (VITA) program provides help to low- and moderate-income taxpayers.

An estimated 22 million Americans between the ages of 18 and 64 have a disability, according to the 2000 Census. In the National Organization on Disability/Harris "Survey of Americans with Disabilities," released in June 2004, 26 percent of people with disabilities reported an annual household income of $15,000 or less. In addition, 83 percent of people with disabilities said they had never claimed an income tax credit or deduction related to their employment or disability. This credit is there for the taking, but a person must apply for it.

Efforts are underway to inform affected families. For one, the IRS is working to encourage more people with disabilities to file their taxes and apply for the tax credit. In partnership with the National Disability Institute (NDI), an organization promoting income preservation and asset development for persons with disabilities nationwide, the IRS started the Real Economic Impact (REI) Tour. The nationwide public-private initiative assists low-income persons with disabilities with asset building strategies, free tax preparation, and filing assistance. In the last filing season, the REI Tour partners prepared more than 36,000 tax returns in 54 cities. People with disabilities received $30 million in refunds--more than $10 million from the EITC. This filing season, NDI anticipates low-income workers getting more than $50 million in EITC and other refunds through its public awareness initiative.

The more money families with special needs have, the more independent they could be. People with disabilities are an economic force in our society, so they should maximize their earning potential by filing for the EITC. Remember, families have until April 15th to turn in their tax returns and EITC form.

By Mary Anne Ehlert, CFP[R]

Mary Anne Ehlert is founder and president of Protected Tomorrows, a nationwide network of advocates for the special needs community. For more than 15 years, Ehlert has worked with hundreds of families to address the future care needs of the individual with disabilities and has inspired real change in the special needs community through presentations and workshops on life planning focusing on family communication, special needs trusts and government benefits. Ehlert can be reached at mehlert@protectedtomorrows.com or (847) 522-8086.