The Star-Ledger

Credit State For Tax Changes

The Star-Ledger — Saturday, February 16, 2008

Changes in state law will make tax time slightly easier this year because of legislation that will put more money in the pockets of low-income workers and deter efforts by greedy tax preparation firms to glom onto some of their returns.

First, new state legislation makes anyone eligible for the federal earned income tax credit eligible for a similar state income tax credit for the working poor.

The tax credit benefits those who work but make so little that they are not eligible for much of a return without the program. Previously, New Jersey had stricter income limits for its tax credit than the IRS did for the federal credit.

Now anyone who qualifies for the federal credit, such as couples who earn less than $39,783 and have at least two children, will qualify for the state credit.

That is a long-awaited and beneficial change that will get a little extra money to the families that need it most.

Each year many who qualify for the tax credit do not apply because they are not aware of the program. This is a good year to spread the word about the tax credit and the fact that nonprofit groups around the state, such as Citizen Action of New Jersey, provide free tax preparation for people earning less than $40,000.

In addition, state law now requires tax preparers to fully explain, up front, what it will cost someone to turn an ex pected refund into "quick cash" from the preparer.

Those deals are really loans that have high, previously hid den fees attached. Because they are often hard-pressed for cash, the working poor have been easy prey for quick cash deals that gobble up a good portion of their refund money. New Jersey needed to write rules to govern these deals.

Citizen Action has negotiated with some banks to lend all or part of refunds to low-in come taxpayers on very attractive terms.

That is more good news. It makes no sense to give a benefit like the tax credit to needy wage earners only to have much of it snatched away by those waiting to take advan tage of that need.

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