The credit undoubtedly provides much needed assistance to folks who are strapped for cash. Changes to the credit that make it easier and more attractive to use would provide a steady stream of assistance to more families, which might ultimately reduce reliance on payday loans and other high-cost forms of borrowing.
Steady cash flow might reduce the day-to-day issues that underlie much instability in low-income communities —for instance scrambling to make the rent or pay the utility bill. The Health Care Tax Credit HCTC provides assistance to low- and moderate-income families purchasing medical coverage from the new health insurance exchanges.
Families submit proof of eligibility based on tax returns from two years prior to when coverage would begin. The government then pays the credit amount directly to the insurance company which in turn reduces premiums to the consumer. At the end of the year, taxpayers would reconcile the credits they received with the actual amount they were eligible for.
A substitute W-2 form may meet the requirement if the same statement is used. Another alternative is to provide IRS Notice , or your own statement that has the same wording. In general, employees must receive the notice by the time that W-2s are issued. For specific information, refer to the IRS. Brochures, posters and other educational resources are periodically made available and listed on the EITC page on Comptroller.
State law also allows agencies to use their existing resources to distribute information to people who are likely to qualify for EITC. See the Training Center for a list of classes and contacts.
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