ACYF-IM-93-04 2/5/93

ACF Administration for Children and Families	U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Administration for Children, Youth and Families
	1. Log No.: ACYF-IM-93-04	2. Issuance Date: 2/5/93
	3. Originating Office: Children's Bureau
	4. Key Word: Earned Income Tax Credit

INFORMATION MEMORANDUM

TO: Head Start Grantees and Delegate Agencies; State Child Welfare Agencies Administering Titles IV-B and IV-E of the Social Security Act and Indian Tribal Organizations

SUBJECT: Earned Income Tax Credit

The purpose of this memorandum is to inform all Head Start programs and State Child Welfare Agencies of a very important tax benefit, called the earned income credit, which could benefit eligible Head Start parents and employees and child welfare clients and parents.

Working families that had an income of less than $22,370 in 1992 and at least one child living at home for more than half the year are eligible for the credit. While the amount of the credit varies according to a family's income, eligible families with one child may receive a credit of up to $1,324. Eligible working families can benefit from the tax credit even if they owe no Federal income tax. Two extra benefits are available to certain families eligible for the basic credit. one is a benefit that pays part or all of the premiums for a health insurance policy that covers a child. The other is an extra credit for families with a child born in 1992.

State Child Welfare Agencies in particular should note that foster parents who are otherwise qualified are now eligible for the earned income credit.

The attached Earned Income Credit Fact Sheets (one in Spanish and one in English) provide more information on how the tax credit works. We encourage programs to make photocopies of the fact sheets and distribute them to parents and employees who earned less than $22,370 in 1992. The fact sheets were prepared by The 1993 Earned Income Credit Campaign of the Center on Budget and Policy Priorities, a private, non-profit organization in Washington, D.C.

The fact sheets list sources which parents and employees may turn to for help in obtaining the tax credit, such as recorded messages in English and Spanish, and a TDD message for hearing-impaired persons.

Please note that eligible families must file two forms with the IRS to receive the credit: a Federal income tax return (Form 1040A or 1040, but not the 1040EZ, or short, form) and a Schedule EIC.

Further information on the tax credit and the necessary forms is available from local IRS offices.

An organization called VITA (Volunteer Income Tax Assistance) provides free tax help at community sites such as shopping malls, community colleges, churches and libraries. To find the location of the nearest VITA site, call the IRS at 1-800-829-1040.

We strongly encourage all Head Start programs and State Child welfare Agencies to provide information on the earned income tax credit to all parents and employees who might be eligible.

Joseph A. Mottola
Acting Commissioner

Attachments:

Earned Income Credit Fact Sheet - English Version
Earned Income Credit Fact Sheet - Spanish Version