Mayor: applying for Earned Income Tax Credit even more important this year due to impact of COVID

  • City, partners to help eligible Detroiters navigate EITC changes caused by COVID
  • Last year nearly 90,000 Detroiters claimed a total of nearly $310 million in EITC
  • Virtual tax preparation assistance and drop and go sites still available
  • Full information available at www.claimyourrefund.com

Applying for the Earned Income Tax Credit is more important than ever this year for Detroiters because of important COVID-related changes and the City and its partners are ready to help residents navigate those changes to claim their maximum refund, Mayor Mike Duggan announced today.

Tax filers this year will see significant changes as a result of COVID-related stimulus checks and unemployment, which are not considered “earned income.”  To allow more individuals to still claim their EITC this year, taxpayers who may have been out of work for much of 2020, for example, will be allowed to file tax returns based on their 2019 or 2020 earned income instead to remain eligible for the EITC.

To learn more and to schedule their appointment, residents can go to www.claimyourrefund.com or call 211.

Mayor Duggan, along with partners from the Accounting Aid Society, United Way for Southeastern Michigan, Wayne Metropolitan Community Action Agency and Detroit at Work, outlined these and other changes, as well as the importance of filing for the EITC at the Mayor’s briefing today.

“Rich people have all kinds of tax credits, but the earned income tax credit is the one tax break created just for working people,” said Mayor Duggan. “COVID has changed a lot of things, so the City and its partners are going to make sure that every Detroiter that is eligible for this opportunity for a larger refund receives the information and assistance they need to claim every dollar they are entitled to.”

Prior to 2017, when the City first launched its annual EITC outreach campaign, EITC-eligible Detroiters were leaving an estimated $80 million of potential tax refunds unclaimed each year.  With the help of the City’s campaign, Detroiters since that time have claimed an average of $56 million more each year – money that has helped to improve the quality of life for thousands of Detroit wage earners.

Who is Eligible to Claim the EITC?

The EITC is available to working families and individuals who meet certain income requirements. The amount of the refund depends on income, filing status and number of qualifying children claimed on their returns. For example:

  • A single individual with no children who works and makes less than $15,820 could get back as much as $538.
  • A married couple with three or more children who files a joint return, with a combined income of less than $56,884could receive the maximum EITC of $6,660.

A full table of eligibility examples can be found at www.claimyourrefund.com.  

Detroiter Tiffany Thomas, a hospital employee and mother of one, has made claiming her EITC and annual practice. Working with the Accounting Aid Society, she has seen a significant increase in the size of her tax return. As a result, she has been able to pay off three credit cards, improve her credit score and is working toward her goal of becoming a home owner.  Thomas says that the Accounting Aid Society, “is the place to go if you want to be educated about your taxes!”

Here are the key changes this year tax filers need to be aware of: EITC and Lookback

This year, individuals who have been out of work in 2020 can still benefit from the EITC by choosing to calculate their EITC based on their 2019 income.  This tax season, filers can choose to use either their 2019 or 2020 earned income to calculate the Earned Income Tax Credit on their 2020 income tax returns, as a result of the recently passed COVID-19 relief package. The lookback will also help people qualify for the refundable portion of the Child Tax Credit, which is allowed even if you do not owe any tax.

Recovery Rebate
Eligible individuals who did not receive their stimulus check or received less than they were eligible for – either the first or the second payment – may be able to claim it when they file their 2020 taxes in 2021 under the Recovery Rebate Credit. Any eligible individual who did not receive the full amount of the stimulus check can claim the Recovery Rebate Credit on a 2020 Form 1040 or Form 1040-SR. Generally, this credit will increase the amount of your tax refund or lower the amount of the tax you owe.

Unemployment Benefits
Unemployment benefits (including pandemic unemployment insurance) are considered taxable income, but do not count as earned income. For individuals that did not withhold taxes from their unemployment payments, it could lower their tax refund or certain clients may owe taxes.

The City’s and its partners are ready to assist Detroit taxpayers.

"Congress recently approved a ‘lookback rule’ for the Earned Income and Child Tax Credits. The rule, means taxpayers who's earned income dropped in 2020 can use their 2019 or 2020 earned income - whichever one will result in the most money returned - to calculate their EITC and Child Tax Credits,” said Matt Hetherwick, Director of Individual Tax Programs for the Accounting Aid Society. “Taxpayers should be prepared to provide a copy of their 2019 tax return, along with their current year tax documents, to ensure they get the largest and most accurate refund possible."

“Wayne Metro is proud to deliver vital free tax services for our community,” said CEO Louis Pritzker. “For low income working families, there is no better way to maximize your refund and receive all credits due to you. Our IRS certified preparers have your best financial wellbeing in mind.”

Tax Preparation Assistance Available Virtual VITA (Volunteer Income Tax Assistance) Program
Families and individuals with incomes up to $57,000 are eligible for free full-service tax help.  As a result of COVID-19 precautions, all in-person tax preparation is suspended. However, tax assistance through Virtual VITA is available to any eligible taxpayer who has an email, smart phone/tablet/computer with a camera. Here's how it works: Residents can schedule their appointments online at www.claimyourrefund.com or call 211. During your appointment, a certified tax intake specialist will walk you through the process of submitting your documents online. The specialist will complete the tax return and then contact the taxpayer to review the return before submitting to the IRS.

Drop and Go Sites
Residents that are not able to complete their taxes online can schedule an appointment to drop off their tax information at a number of Drop and Go sites and have their tax returns prepared. Residents can schedule an appointment online at www.claimyourrefund.com or call 211.

"The EITC provides a vital income boost for working families by allowing them to keep more of their hard-earned money," said Kyle DuBuc, executive director of Policy, Advocacy & Communications, United Way for Southeastern Michigan. "We're proud of this partnership which helps people secure the full credit they've earned. This work has a meaningful impact on household budgets, many of which have been hard hit by the pandemic. We hope the legislature and Governor Whitmer will consider providing even more relief to Michigan workers by increasing the state EITC."

Filing Taxes
Eligible Detroit residents also can use free online tax software and prepare their returns themselves. Individuals are encouraged to file their own taxes for free by using simple online software.

United Way’s MyFreeTaxes program is available for free to anyone at any income as long as the return is simple (no self-employment, investment income or capital gains). The guided question-and-answer format will help you file your federal, state, and local tax returns and can handle self-employed tax returns. To use MyFreeTaxes visit UnitedWaySEM.org/Taxes

Turbo Tax Free File is available to anyone with an income less than $39,000 or up to $72,000 for active military or anyone who qualifies for the Earned Income Tax Credit. The TurboTax Free File program includes your federal, state and local tax returns and can handle self-employed tax returns. To use Free File, visit reefile.intuit.com.   Individuals with income up to $57,000 qualify for free Virtual VITA or Drop and Go.