Low-income workers in Alaska have lost tens of millions of dollars in recent years by not participating in a federal program known as the earned income tax credit.
Alaska has the lowest participation average in the country, said David Williams, head of the earned income tax credit program. Williams said in a Monday teleconference from Seattle that about 75 percent of eligible Americans participate in the program, but only about 56 percent of Alaskans did in 2002.
"Even at the national average we think it's too low," he said.
About 36,315 Alaskans applied for the tax credit in 2002, receiving just less than $54 million, Williams said.
Under the earned income tax credit program, those who work but have low incomes can apply for the credit to lower their taxes or claim a refund. To be eligible for the program a worker's adjusted gross income cannot exceed $34,458 with two or more children, $30,338 with one child or $11,490 with no children. The income eligibility levels are increased by $1,000 for married individuals filing jointly.
Applicants also must have a valid Social Security number, U.S. citizenship or alien residency and any investment income must be less than $2,650.
Williams said those who are eligible but have missed the credit in the last three years can still apply for those refunds. The earned income credit program is focusing on educating Alaska and nine other states and cities that have low participation levels, he said.
"We think there are millions of dollars not claimed," Williams said. "Our goal is to maximize participation and minimize error."
He said errors result from those who incorrectly fill out the tax forms, and others miss out on the credit because they think they're not eligible. In the mid-1990s, Williams said Congress expanded the program to include individuals with no children. He said many people remain unaware of the change.
About 95 percent of eligible mothers with children claim the credit, while about 40 to 50 percent of childless workers claim the credit, he said.
"That's an across-the-board effect," Williams said.
He said a partnership between an Anchorage-based nonprofit known as the Alaska Development Center and the University of Alaska is working to get tax help to rural villages.
"I do know that in the majority of villages most of the taxpayers are earned income taxpayers," said Andrei Chakine, program manager for the center's volunteer tax and loan program.
The group assisted about 5,876 individuals in 91 villages in 2004, Chakine said. The assistance last year resulted in the villages paying $372,614 and receiving just less than $3.2 million in refunds, Chakine said.
"According to IRS statistics these refunds generated about $20 million in economic activity in those areas," he said.
The group visited three Southeast communities - Hoonah, Angoon and Kake - last year and plans to add Metlakatla and Yakutat this year.
Timothy Inklebarger can be reached at Timothy.firstname.lastname@example.org.