Helping Custodial and Noncustodial Parents Claim the EITC

How does the EITC help families with children?

Lifting more than 5 million people out of poverty every year, the Federal Earned Income Tax Credit (EITC) is the nation’s largest cash assistance program for low-income families. Along with child support, it is the biggest income support for low-income working parents with children. For tax year 2009, EITC was available to families whose adjusted gross income did not exceed $43,279 with three or more qualifying children; $40,295 with two qualifying children; $35,463 with one qualifying child; and $13,440 with no qualifying children. Yet the Internal Revenue Service (IRS) estimates that 20 to 25 percent of eligible taxpayers do not claim the EITC.

Twenty-three States and the District of Columbia provide a State version of the EITC to supplement the Federal credit. For more information about State initiatives, see information from the Tax Credits for Working Families Web site. In addition, local governments in Montgomery County, Maryland, San Francisco, and New York City offer their own version of the EITC. For information and tools on helping custodial parents claim the EITC and other tax benefits that might assist them, visit the Assets for Independence Resource Center Web site at www.IDAResources.org and click on EITC and Tax Assistance.

Are EITC benefits available for taxpayers who are noncustodial parents?

Noncustodial parents are eligible for the federal EITC if they meet the eligibility requirements. Many states also have a state EITC, which noncustodial parents may be eligible for. The EITC is largest for low-income workers with qualifying children. These children must live with the parent for at least half of the year and meet other eligibility requirements. A smaller EITC is available for low-income workers without qualifying children. The maximum credit for this EITC was $457 in 2009. Many individuals fail to claim this credit. See IRS document #596--Earned Income Credit: Are You Eligible? (http://www.irs.gov/pub/irs-pdf/p596.pdf) for the full list of qualifying criteria. Only one parent can claim the EITC for a qualifying child.

New York State and the District of Columbia (D.C.) have recently enacted noncustodial parent EITCs. These State programs are in addition to what parents may receive in Federal EITC assistance, but are limited to noncustodial parents who pay the full amount of child support due during the tax year. However, both New York and D.C. will intercept a noncustodial parent's tax refund to pay any child support arrears that are due.

In D.C., taxpayers who are parents of a minor child, are required to pay child support, and meet other conditions, are eligible for a D.C. EITC equal to 40 percent of the Federal EITC refund amount that would have been allowed by the IRS. The D.C. credit is restricted to those ages 18-30. For more information, see the D.C. EITC page of the Office of Tax and Revenue.

New York's Noncustodial Parent EITC is equal to the greater of 2.5 times the Federal EITC for no qualifying children or 20 percent of the Federal EITC for custodial parents with one child. The credit is offered on a sliding scale to those noncustodial parents ages 18 and over with incomes up to approximately $34,450. However, many noncustodial parents do not qualify for the credit because they are not in compliance with their child support order. For more information, visit New York's Office for Temporary Assistance and Disability's webpage.

How can child support agencies partner with AFI grantees to help parents claim the EITC?

Child Support Offices can partner with AFI grantees and other asset building organizations to promote the EITC to mothers and fathers in the child support system. In addition, the federal Office of Child Support (OCSE) encourages working with Volunteer Income Tax Assistance (VITA) sites for free tax assistance as well as directly with the IRS. For more information, see OCSE's Child Support Report.

One example of an AFI site coordinating with VITA and other partners around filing for the EITC is the City of San Antonio. To find out more about how the city used tax prepartion and the EITC as a springboard for providing other services, see the case study online.