2015, 2016 Maine Earned Income Tax Credit Maine EITC

Maine Earned Income Credit

This credit is available to an individual who is allowed a federal earned income tax credit. The credit is equal to 5% of the federal credit. The credit is apportioned for nonresidents based on the percentage of income earned in Maine. The Earned Income Tax Credit (EITC) is a refundable federal tax credit for low- and moderate-income working people that has been shown to be eective at reducing poverty and encouraging work for families with children.

 

Benefits of the Maine Earned Income tax Credit

In a report updated by the Center on Budget and Policy Priorities in March 2015 , the authors point to a growing body of evidence that the EITC helps families at virtually every stage of life: 0 Researchers have found links between increased ElTCs and improvements in infant health indicators such as birth weight and premature birth. ~ Elementary and middle-school students whose families received larger EITC refundable credits tend to have higher test scores in the year of receipt. 0 Children in low-income families that benefit from expanded state or federal ElTCs are more likely to go to college. Researchers attribute this to lasting academic gains from higher ElTCs in middle school and earlier.

 

How much in the Maine EITC?

Q For each $3,000 a year in added income that children in a working-poor family receive before age 6, they work more hours during their young adult years, increasing their average annual earnings by 17 percent. 0 Working age women who benefit from ElTCs boost their Social Security retirement benefits, which should reduce the risk of poverty in old age.

 

What is the Maine EITC?

Since Maine s state EITC credit is currently not refundable, it excludes many households from needed bene ts. The value of the tax credit cannot exceed a family s tax liability, and thus, under the current nonrefundable system, some of the poorest working families with incomes under $24,000 do not receive the state EITC. This was the case for one of our lers, a nontraditional student working part-time to pay for his education and care for a disabled child. Under a 20% refundable state EITC, this filer could have received precious additional funds of nearly $500 to assist him in moving out of poverty.