Tax credits you need to know about

Low- and moderate-income Michigan families can put hundreds or even thousands of dollars back into their household budgets by making sure they file for all available credits and deductions this tax season.

The 2010 edition of "Money Back in Michigan" by the Michigan League for Human Services, recently released, encourages households to take advantage of nine federal and state tax credits and deductions. The packet also encourages tax-filers to use free tax preparation services and skip expensive "rapid refund" centers that can eat up a chunk of the refund.

"Every dollar counts in today's tough economy,'' said MLHS President and CEO Sharon Parks. "Many families may not realize they are eligible for this broad range of tax breaks and refunds, and that they can get free help in filing for them.''

New this year is the expanded Michigan Earned Income Tax Credit, aimed at helping lower-income working families. For tax year 2009, the Michigan EITC will be 20 percent of the federal EITC, doubling last year's credit of 10 percent. In addition, those families with three or more children will realize larger Earned Income Tax Credits. The federal and state credits are refundable - meaning the refunds may be larger than the taxes paid.

"This is a huge help for working families in Michigan,'' Parks said. "It's essential that workers check to see if they qualify."

For example, a single parent of two children who earned less than $40,295 in 2009 qualifies for $6,034 in state and federal Earned Income Tax Credits.

The American Recovery and Reinvestment Act also added other benefits. The federal Child Tax Credit will be available to families earning as little as $3,000, as opposed to $8,500 in 2008. Another new credit is the American Opportunity Tax Credit, making postsecondary education more affordable. This credit is worth up to $2,500 and is refundable up to $1,000.

Another new credit under the Recovery Act is the federal Making Work Pay Credit of $400 for individuals and $800 for married couples filing jointly. Other credits detailed in "Money Back in Michigan" are the federal Child and Dependent Care Credit, the state Child Deduction, the state Home Heating Tax Credit and the state Homestead Property Tax Credit.

It's important to know that the Michigan Home Heating Tax Credit is available to income-eligible renters, even to those who have heat included in the rent. And the Homestead Property Tax Credit, up to $1,200, can be used to reduce the amount of taxes owed or issued as a refund. It is also available to renters.

The "Money Back in Michigan" packet also encourages tax-filers to use IRS-trained volunteers for help in filing taxes. Visit, or call 2-1-1 (or 1-800-552-1183 if no answer), to find the closest Volunteer Income Tax Assistance site.

Another option is to file online using free software available at And, of course, taxpayers can also find forms at post offices, libraries or by calling 1-800-TAX FORM to file their own taxes.

Filers using commercial services may pay several hundred dollars out of their refunds to for the service as well as a "rapid refund'' loan. Those are dollars that would be better spent on household needs. "Money Back in Michigan" has a series of fliers that can be distributed at libraries, child care centers, tax offices and other public areas to raise awareness of the tax breaks and refunds. It's available at

The Michigan League for Human Services is a statewide, nonprofit, nonpartisan policy and advocacy group for low-income citizens. It has a network of more than 1,500 from business, labor, human service professions, faith-based organizations as well as concerned citizens.

Published: Thu, Feb 11, 2010