Unclaimed tax credit costs The City business 

Thousands of San Francisco residents have been neglecting millions of dollars in available tax credits and costing The City potential jobs and much-needed revenue, according to a new study.

More than 12,000 San Francisco residents never claimed a total of $13 million in Earned Income Tax Credit, which is one of the largest federal resources for assisting working families, according to a new study conducted by the New America Foundation, a Sacramento-based nonprofit public policy institute. Those figures were based on 2006 IRS data.

In California, an estimated 800,000 residents neglected to collect about $1.2 billion in 2006 through the Earned Income Tax Credit — the highest figure in the nation — according to the study.

This year, more people are likely to qualify as the San Francisco unemployment rate hovers above 10 percent. Residents who qualify can earn up to $5,657, an increase from the $4,824 last year, which is part of the federal stimulus program, said Anne Stuhldreher, a fellow with the New America Foundation.

Putting an extra few thousands dollars in the pockets of San Francisco families is a huge boon for local economies, researchers said. 

“Here you have the largest resource, dollarwise, for lower- and moderate-income working people,” said Stuhldreher. “And nobody has ever heard of it.”

That’s in part because the tax credit program has not been well advertised, said Stuhldreher. Also, many people who do qualify are hindered by language barriers or they do not realize the benefit will cost them nothing, said Kristy Koberna, executive director for Tax Aid in San Francisco.

To qualify for the federal tax credit, you must be a legal citizen with a valid Social Security number. For the 2009 tax year, a qualified claimant may have investment income of less than $3,100 and a maximum annual earned income of varying levels based on the number of qualifying children.

California will miss out on $1.4 billion in business sales statewide due to unclaimed Earned Income Tax Credit in 2009. Likewise, San Francisco stands to lose more than $14 million in business sales, according to the study.

“This is a really important economic stimulus,” Stuhldreher said. “The most effective ways to stimulate the economy are things that put money in the hands of lower- and moderate-income people because they spend it immediately.”


Lost revenue

As a result of unclaimed Earned Income Tax Credit in 2009, San Francisco will miss out on:

$14 million Business sales
69 Jobs
$3.7 million Wages

Source: New America Foundation

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Erin Sherbert

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