University of Wisconsin - Extension

Many Wisconsin residents can get thousands of dollars back at tax time by taking advantage of valuable state and federal tax credits, according to Judi Bartfeld, University of Wisconsin-Extension specialist and a professor in UW-Madison¿s School of Human Ecology. These credits include the federal Earned Income Credit, the Wisconsin Earned Income Credit, the Wisconsin Homestead Credit and the federal Child Tax Credit.

If you are eligible for these credits, they can reduce your taxes ¿ sometimes all the way to zero. If you are eligible but don¿t owe taxes, you can get a check back from the government. But, you have to file a tax return to get the credits ¿ and you have to indicate on the tax form that you are eligible.

If your family earned less than $28,281 and you have one child, you may be eligible for the federal Earned Income Credit. Families with two or more children are eligible with income up to $32,121, and families without children earning less than $10,710 may also receive a credit. Families with children who qualify for the federal Earned Income Credit are automatically eligible for an additional state credit as well. The largest credits ¿ up to $5,560 in combined federal and state earned income credits -- go to families with three or more children who earn between $10,000 and $13,000.

According to Bartfeld, a recent study found that about one-quarter of people eligible for the federal earned income credit miss out, because they don¿t file a tax return or don¿t indicate that they qualify for the credit. The number of people claiming the Wisconsin earned income credit has dropped during each of the past several years.

To claim the federal earned income credit, file either the 1040 or 1040A tax form, along with Schedule EIC. If you were eligible but didn¿t claim the credit in the past three years, you can still do so by filing an amended return. To claim the Wisconsin earned income credit, file Wisconsin tax form 1 or 1A.

In addition to the EIC, many low income families can now benefit from the federal Child Tax Credit. New rules passed by Congress make this valuable credit ¿ worth up to $600 per child ¿ available to millions more low income families. To get money back from this credit, you need earned income higher than $10,000. To claim this credit, file the 1040 or 1040A tax form. If you are eligible to get money back, you also need to file form 8812.

Renters and homeowners who have incomes of less than $24,500 may also be eligible for the Wisconsin Homestead Credit, worth up to $1160. The Homestead Credit is designed to lessen the impact of rent and property taxes for low and moderate income families. If you qualify, you can get back some or all of your state taxes withheld during the year. If you do not have earnings, or if your earnings were too small to have taxes withheld, you can get extra cash back from the State. To claim this credit, file Schedule H along with a copy of your property tax bill or rent certificate signed by your landlord. You have five years to file for the Homestead Credit ¿ so if you missed out in past years, it¿s not too late.

The VITA (Volunteer Income Tax Assistance) Program offers free tax preparation for low and moderate income families. {insert info on hours/location of local VITA program if available.}

To learn more about these tax credits, visit UW-Extension¿s tax credit Web site at www.uwex.edu/ces/econ . This Web site can help you find out if you may be eligible for these credits. It gives instructions on how to file for the credits; provides the tax forms you will need; and can even help you locate free tax assistance.