TRENTON, N.J. – Taxpayers that have lower earned income this year could be receiving a lower tax credit from the federal government, and consequentially from state government, because of economic shutdowns resulting from the pandemic response.
Assemblymen Brian Bergen, Hal Wirths and John Catalano want to make sure working families continue to receive this critical lifeline.
“The earned income tax credit is the single most effective policy for lifting people out of poverty,” said Bergen (R-Morris). “That could be diminished because instead of receiving paychecks workers are receiving unemployment checks. The last thing families need is another loss of income they count on.”
The trio of Republican lawmakers introduced a bill (A5090) that would provide anyone who qualifies for the EITC to receive the same amount of money this year as last year if this year’s check is lower because of filing a lower earned income.
“Anyone who would have received a larger check should get it,” said Wirths (R-Sussex). “It is not their fault that they were forced to take unemployment instead of working. They shouldn’t face the consequences. People are struggling and we need to help any way we can.”
Working families in New Jersey are losing earned income. As a result, they will receive a lower EITC check because unemployment compensation is not included as earned income for purposes of the federal credit. The state simply multiplies a taxpayer’s federal credit by 0.4 to determine the state credit.
“The bill will make sure people do not lose state tax benefits on top of all the other money they have lost,” said Catalano (R-Ocean). “A substantial amount of people have been laid off this year. It is important we make sure people have the money to feed their families and keep a roof over their heads.”
A Harvard data website, TrackTheRecovery.org, estimates 31 percent of businesses in New Jersey have closed permanently, costing employees their jobs and lower earned income this year. Nearly 600,000 residents filed for the EITC in tax year 2017, the most recent data available.