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Taxpayers miss out on thousands by not using tax credit

Posted at 2:36 PM, Feb 15, 2017

Who wouldn't want a few thousand dollars more in their income tax return? Experts say there's a tax credit that could make that happen for a lot of us, but many people aren't taking advantage of it.

When it comes to her taxes, Laverne Shelton never considered there could be refund money she's not getting.

"I don't really think about the different credits and stuff," Shelton says. "I just know every year I've got to file my taxes."

"That would mean a big deal to me," Shelton says. "That would help me out a lot because I'm retired now."

The IRS says about 26 million people got nearly $66 billion from the Earned Income Tax Credit last year with the average amount received being anywhere from $2,400 to more than $6,000.

Still, one out of five workers who are eligible, don't take advantage of it.

"I would say everybody needs to look into this," says Gerald Spivey with H&R Block. 

He says there are reasons why people are leaving money on the table.

"There's a lot of moving parts to it," Spivey says. "There's not a lot of understanding to it. That's why a lot of people quite don't understand they're eligible or not."

To be eligible, you must earn less than $54,000 a year either from a job, self employment or even some disability payments. And you can claim the credit whether you owe taxes or not, and even if you aren't required to file a return. You don't have to have kids, but you might get more back if you do. And if you are a member of the military, the clergy or another special group there are special considerations. 

You can even file or amend your return to get the credit for the last three years, something Spivey helped his clients do.

"They said, 'Well we didn't file last year because we didn't make enough money,'" Spivey recalls. "Well we filed the return and guess what they got a very nice refund so that was money that was being left on the table."

Spivey says the bottom line is to just try. It could mean an unexpected but welcome change to simply filing your taxes.

If you want to find out if you qualify for this credit, you can use the EITC Assistant on the IRS website.

Most major tax software or tax preparers will walk you through a series of questions to determine if you are eligible.