Tax Credit

TRENTON — When the electric company shut off Barbara Offredo's service last spring, she used flashlights to cheer up her 11-year-old son, Joseph, who missed lights, cooked meals, and hot showers. "Pretend we are camping," she told him, knowing it would be eight days before she could pay some of what she owed. Offredo, 51, of Hamilton, choked up telling the story Monday. A full-time hospice nurse and single mother of two, Offredo said she is on the brink of homelessness because rent for her two-bedroom apartment eats up half of her monthly salary.

Mark Segal had been biting his nails, waiting for the call. Thursday morning, he was drinking a mug of sweet vanilla coffee in his den above the offices of the Philadelphia Gay News, when the phone finally rang. His dream project, an affordable housing complex welcoming to lesbian, gay, bisexual and transgender seniors, had won a competitive bid for an $11 million state tax credit. "I've been trying not to cry," Segal said Sunday, barely succeeding in holding back the kvell . For more than three years, the 61-year-old founder and publisher of PGN has been planning, lobbying, negotiating, collaborating and cajoling every social service agency, activist group and political leader he knows to make Philadelphia one of the first cities in the nation to meet the needs of the aging LGBT community.

It wasn't the Devil that made M. Night Shyamalan do it. It was the Harrisburg budget impasse. With uncertainty about whether Pennsylvania's film tax credit will be authorized in the state budget - now in Day 56 of limbo - the supernatural thriller (which Shyamalan wrote and is producing) has relocated production to Toronto. Though the filmmaker has shot eight of his nine features in the Philadelphia region - for an estimated economic impact of $375 million, according to the local film office - his backers couldn't wait any longer for legislators to approve the incentive that brings filmmaking and jobs to the state.

IN HIS LETTER ("Unearned tax credit"), Vincent P.A. Benedict of Collegeville says he is dreading April 15 because he will be sending a check to the IRS. I am a single mother who has put herself through almost 10 years of college while working and supporting her family. I am so looking forward to the day when I will be making enough money that I actually "owe" money to the IRS. I will never forget the lean years when that Earned Income Tax Credit was there to help pay my gas and electric bills and help me to take my children to the Jersey shore for the weekend.

City Council yesterday called on state congressional leaders to help increase the number of working families benefiting from the federal Earned Income Tax Credit so they can climb out of poverty. In a resolution sponsored by Councilwoman Marian B. Tasco and unanimously approved by Council, city officials request that the IRS require employers to include tax-credit information when mailing federal W-2 tax forms to their employees. The tax credit offsets income taxes and provides refunds to families with two or more children who earn less than $34,692 a year.

George W. Bush and Al Gore are offering both tax credits and tax deductions. What's the difference, and how do they work? Tax credits directly lower your tax bill. Broadly speaking, if you have $10,000 in taxable income, you're in the 15 percent federal tax bracket and owe $1,500 in taxes. For every child you have, you're entitled to a $500 tax credit. Let's say you have one kid: That $1,500 tax bill would be lowered to $1,000. Tax credits come in two varieties, refundable and nonrefundable.

City Council signaled yesterday that Mayor Nutter would have a difficult time deep-sixing already approved wage-tax cuts for the working poor to help pay for his proposed business-tax cuts. At least five Council members said in a budget hearing yesterday that they flat-out opposed or were deeply skeptical of calls to eliminate the so-called David Cohen tax credit, which was championed by the former city councilman, who died two years ago. "With an acknowledged rate of 25 percent of our citizens in poverty, I'm not satisfied that we're presenting a budget where we are more aggressive on our business-tax cuts," said Councilwoman Maria Qui?ones Sanchez.

TRENTON - Two Bergen County Democrats went on location to Fort Lee - the one-time capital of the motion picture industry - to launch their latest appeal for renewal of a tax credit for production companies that make movies or television shows in New Jersey. Sens. Loretta Weinberg and Paul Sarlo say the Film and Digital Media Tax Credit Program creates jobs and drives the economy. The Christie administration maintains that tax credits have produced disappointing economic results. Gov. Christie suspended the credit after taking office, saving $10 million.

For 20 years now, Republicans and Democrats alike have supported the earned-income tax credit as a way to benefit Americans who "work hard and play by the rules. " By allowing working, poor Americans to keep more of what they earn, the tax credit provided an incentive for people to get off welfare - and to work at the low-paying jobs that are easiest for them to get. The tax credit program recognized and tried to alleviate an economic reality: Minimum wage jobs without benefits simply do not provide enough money to keep a family out of poverty.

It was meant to be a different kind of federal program - one that would help struggling families without fostering dependency and inviting abuse. Called the Earned Income Tax Credit (EITC), the program uses the tax system to pay low-income families up to $2,528 a year to supplement their earnings. The goal: Reward the working poor and encourage them to stay off welfare. But with one in five American families now getting EITC payments, fraud is costing taxpayers $1 billion a year.

Q. I think electric cars are the wave of the future. As soon as I read that [GM's Volt is available in all states], I contacted a nearby Chevy dealer who has been a lifelong friend to get on the list to buy one. He assured me that I'd be among his first 50. The price will be about $40,000. The demand is apparently so great that the dealer will be able to demand full sticker price for some time to come, so I got no price break. However, he assured me that the price hit will be softened by a federal income-tax credit.

TRENTON — When the electric company shut off Barbara Offredo's service last spring, she used flashlights to cheer up her 11-year-old son, Joseph, who missed lights, cooked meals, and hot showers. "Pretend we are camping," she told him, knowing it would be eight days before she could pay some of what she owed. Offredo, 51, of Hamilton, choked up telling the story Monday. A full-time hospice nurse and single mother of two, Offredo said she is on the brink of homelessness because rent for her two-bedroom apartment eats up half of her monthly salary.

GARFIELD, N.J. — Gov. Christie on Wednesday ramped up public pressure on Assembly Democrats to agree to his tax-cut plan. The Republican governor told a town hall audience in this Bergen County town that Democrats in the lower house are obsessed with raising taxes. Christie is trying to drum up support for his plan to reduce income taxes by 10 percent over four years. The Assembly and Senate have offered competing plans. The Assembly plan would reduce taxes 20 percent — 25 percent for seniors and the disabled — funding the reduction by reinstating the so-called millionaires' tax. Christie previously has vetoed a millionaires' tax. The Senate plan provides a tax credit of up to $1,000 based on amount of property taxes paid.

As City Council mulls Mayor Nutter's proposal to shift to a property-tax system based on market values, Council President Darrell Clarke revealed a plan Thursday that would lessen the blow to longtime homeowners, seniors and low-income residents. Clarke's proposal includes a plan to give property-tax exemptions to homeowners of 10 years or more in neighborhoods where property values have spiked due to development. The bill doesn't yet specify the amount of the exemption, and the city would need enabling legislation from the state.

Mark Segal had been biting his nails, waiting for the call. Thursday morning, he was drinking a mug of sweet vanilla coffee in his den above the offices of the Philadelphia Gay News when the phone finally rang. His dream project, an affordable housing complex welcoming to lesbian, gay, bisexual, and transgender seniors, had won a competitive bid for an $11 million state tax credit. "I've been trying not to cry," Segal said Sunday, barely succeeding in holding back the kvell . For more than three years, the 61-year-old founder and publisher of PGN has been planning, lobbying, negotiating, collaborating, and cajoling every social-service agency, activist group, and political leader he knows to make Philadelphia one of the first cities in the nation to meet the needs of the aging LGBT community.

Give your tax return your full attention. It might be one of your last chances to partake in about $450 billion in tax breaks set to disappear at the end of this year. With the federal government scrounging for money and desperate to relieve a mounting deficit, lawmakers are circling some favorite tax breaks like vultures. During the last couple of years, they have tried to spur an anemic economy by putting a little more of your income back into your pocket instead of routing it to taxes.

WHEN THE CITY and the Philadelphia School District participated in interest-rate swaps - contracts aimed at trimming city borrowing costs - it backfired and the city ended up dishing out millions to big banks to break the deal. Now, City Council wants to see if the city can get some of that money back and whether legal action should be pursued. Councilman Jim Kenney introduced a resolution yesterday calling for hearings to investigate the use of interest-rate swaps. Local governments and schools were swayed by bankers in the early 2000s to purchase swaps that were dependent on the future of U.S. interest rates.

The city has won $50 million in federal tax credits that will be used to spur economic-development projects in targeted neighborhoods, Mayor Nutter announced Thursday. The money will be doled out by the Philadelphia Industrial Development Corp. primarily for four types of projects - supermarket-anchored shopping centers, health-care facilities, manufacturing, and mixed-use developments. The city last received the New Markets Tax Credits in 2007, using the money to help finance four projects, including the SuperFresh grocery at Second Street and Girard Avenue and the Hilton Homewood Suites on City Avenue.

After the financial stress of the last few years, your tax return this year might offer some relief, but it also might deliver some disappointment. If you were out of a job for part of 2011, you may find yourself able to qualify for lucrative tax credits and deductions you can't normally get. At the same time, however, Uncle Sam will continue to make an unpleasant demand if you were one of the first-time home buyers who used a $7,500 tax credit in 2008 to buy a new home. People who took that credit in 2008 have to pay it back, said Robin Christian, senior tax analyst for Thomson Reuters.