HSIPC: Head Start Bulletin--Early Head Start: Helping Families Obtain Tax Information

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Winter 1995/1996

Vol. I, Issue No. 57

Helping Families Obtain Tax Information

Financial relief for working families is available through two tax programs, the Earned Income Credit and the Child and Dependent Care Tax Credit.

The Earned Income Credit (EIC) reduces the amount of tax an individual owes and can also result in a refund after a tax return is filed. Eligible workers may choose to receive the EIC in advance payments in each paycheck.

The Center on Budget and Policy Priorities can provide an Earned Income Credit Outreach Kit to give programs the information families need to access the EIC. The kits contain materials in both English and Spanish. The first kit is free and additional kits are available for a minimal charge. For more information on obtaining a kit, contact the Center on Budget and Policy Priorities, 777 N. Capitol Street, NE, Suite 705, Washington, DC 20002, or call: (202) 408-1080.

In addition to the EIC, families may also be eligible for the Child and Dependent Care Credit, a benefit that helps families pay for child care. Families can receive credit for 20--30% of their child care expenses, depending on income.

For a fact sheet about the Earned Income Credit or the Child and Dependent Care Credit, contact Linda Cooper at the National Women's Law Center, 11 Dupont Circle, Suite 800, Washington, DC 20036, or call: (202) 588-5180.

The Child Care Action Campaign has a two page Information Guide (#16) on How to Use the Federal Child Care Tax Credit. To obtain a copy, call: (212) 239-0138, or e-mail a request to: hn57460@handsnet.org

The Internal Revenue Service has several publications that explain how to qualify for and claim the EIC and the Child and Dependent Care Credit. Ordering information is provided below.

Employment Taxes for Household Employers

For parents who employ a provider to deliver child care services in the child's home, there is new information on reporting and paying employment taxes. The IRS publishes several documents which provide guidance on this topic. A list of these publications is provided below.

IN TAX YEAR 1995, THOSE ELIGIBLE FOR THE EARNED INCOME CREDIT INCLUDE:

Workers with one child who earned less than $24,396 in 1995 are eligible for a credit of up to $2,094;
Workers with two or more children who earned less than $26,673 in 1995 are eligible for a credit of up to 3,110;
Workers who earned less than $9,230 in 1995 and who are not raising children are eligible for a maximum credit of $314 if they are at least 25 and under 65.

Earned Income Credit Outreach Kit, available through the Center on Budget and Policy Priorities.

Free Tax Preparation Assistance

The IRS Volunteer Income Tax Assistance (VITA) program helps low-income workers complete their tax forms. For more information on VITA and other tax related questions, call: (800) 829-1040 (800-TAX-1040).

PUBLICATIONS AVAILABLE THROUGH THE INTERNAL REVENUE SERVICE

The following publications may be requested through the IRS by calling: (800) 829-3676 800-TAX-FORM). It may also be possible to locate reference copies of these IRS publications at your local library.

#596 Earned Income Credit
#503 Child and Dependent Care Expenses
#926 Employment Taxes for Household Employers
#15 Employers Tax Guide (Circular "E")

Information compiled by the National Child Care Information Center, (800) 616-2242. The information contained in this document does not constitute tax advice or legal representation. No official endorsement of any publication or organization is intended or should be inferred. For specific information on eligibility for tax credit programs, consult an accountant or other tax expert.

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Head Start Bulletin Issue No. 57 Contents

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