Raise your hand if you think filing a federal tax return will bring you thousands of dollars. Or if you think tax time this year could bring a windfall of federal stimulus dollars to Fresno's economy.
Most hands, I predict, are down. Everyone dreads doing their taxes. But this year, every working family with an income of less than $48,000 could have a big reason to look forward to it. That's because of something known as the Earned Income Tax Credit. It could be called Big Bucks For Fresno.
It makes filing that tax return very, very worthwhile for many people.
It might take half an hour for a filer to go through the qualifications and figure out what their Earned Income Tax Credit is. But new research by economists at Fresno State and released by the New America Foundation estimates that Fresno workers are leaving more than $45 million in refunds unclaimed. If that much money can't make tax returns interesting, nothing will.
The EITC has been around since President Richard Nixon, and was designed for people who work but don't have high incomes. It has been called the most effective federal antipoverty program ever.
But 24.9% of those eligible for the EITC in California don't file for it. That's the highest rate in the nation, according to IRS data cited in the new report, "Left on the table-Unclaimed Earned Income Tax Credits cost California's economy and low-income residents $1 billion annually."
Fresno workers who qualify for the EITC's income thresholds and basic qualifications (in a nutshell: live here, work here, don't file as a dependent) earned a piece of that $45 million. The payoff, especially for those with children, can be huge.
A married couple filing jointly with a combined income of $48,279 and three or more qualifying children can get a $5,657 credit; that's almost six weeks income for that family from one line on the tax return. And people who don't make enough to be required to file are especially likely to qualify -- which really makes tax time pay (it's also part of the reason people don't know about the credit).
There's a substantial silver lining for businesses too: Unclaimed EITCs are Fresno's unclaimed federal stimulus. Credit amounts and income thresholds were raised this year because the federal government wants more people to get their earned income back, so they can use it to stimulate the economy.
Research has shown that programs like the EITC are one of the most effective ways to boost business and create jobs, because they put money in the hands of those who are likely to spend them immediately.
Those who don't claim their credit -- because it's confusing, or they just don't know about it -- are not the only ones who will be worse off this year. Just ask any businessperson if they think it's a good thing that Fresno will lose $55 million that could have been generated by those unclaimed credits this year. In these times, they're likely to say, that's too much to lose. But that's just the report predicts will happen.
But it doesn't have to. Businesses and the Chamber of Commerce could support local tax prep sites, which specialize in getting these dollars claimed.
California First Lady Maria Shriver's WE Connect campaign is coming to the Big Fresno Fairgrounds Friday through Sunday to help workers connect with resources like this credit. Their success will mean more money coming to Fresno families and the economy. It almost makes filing tax returns a positive thing.