New Law: clarifying eligibility for the earned income tax credit

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Legislative Update:

This bill was signed into law as part of the FY 2018 final budget. 

Last session Rep. Ehrlich was able to pass a bill into law that will save Massachusetts resident $8-10 million this year and every year in the future. 

The bill involves the Earned Income Tax Credit, which has for many years been one of our most effective anti-poverty tools. The program provides tax credits to low and middle income families based on earnings. Because the credit is given to people who work in Massachusetts, but are not necessarily residents, millions of dollars have in the past been sent to our neighboring states, numbering as high as 20,000 filers.

The bill Rep. Ehrlich filed clarified some of the rules about the credit, including which partial-year residents can receive it, while denying the credit to nonresidents. The Earned Income Tax Credit has a very powerful stimulus effect because recipients spend that money in their local communities so by only permitting Mass residents to claim this credit our state's economy will also feel that powerful stimulus. 

The bill also expanded access to the credit for survivors of domestic abuse by allowing them to claim the credit while filing their taxes as “married, filing separately.” As of now, individuals are often impeded from claiming the EITC unless they file their taxes jointly with their spouse. With this change, individuals who are still legally tied to their spouse but are estranged can still receive the credit.