BALTIMORE — About 72,000 Maryland tax filers may have been eligible for the Earned Income Tax Credit but never claimed it, and new deductions for seniors, tipped workers, and overtime pay are now available.
With Tax Day about a month away, thousands of Marylanders may be leaving money on the table. In Tax Year 2024, an estimated 72,000 tax filers in Maryland may have been eligible for the Earned Income Tax Credit but never filed for it, according to the Comptroller of Maryland. Now there's a push to make sure people don't miss out, and new credits and deductions are available this year that some filers may not know about.
The Earned Income Tax Credit is one of the largest tax credits available. The credit is designed for people who work but have low or moderate income, and eligibility depends on income, filing status, number of children, and investment income.
John Hardt, director of the Low Income Taxpayer Clinic at Maryland Volunteer Lawyers Service, said the credit can be significant.
"If they have 3 or more dependents it can be upwards of even $8,000 this year. But the IRS says only 4 out of 5 people who are eligible claim it," Hardt said.
Hardt said many filers miss credits simply because they don't fully understand the process.
"If a lot of people just don't file taxes or try to do it themselves and don't really understand the process, then it is very easy to miss a lot of tax credits," Hardt said.
Another commonly missed credit is the Child Tax Credit, available to parents with a dependent under 17.
"For each qualified child, it can be up to this year $2,200," Hardt said.
The One Big Beautiful Bill Act created new tax deductions this filing season. Among them is an additional $6,000 deduction for filers 65 and older. The senior bonus begins phasing out for incomes exceeding $75,000, and no special application is required. Filers simply need to check the 65 or older box.
Workers can also now deduct their tips, up to $25,000, but Hardt urged caution.
"I would just advise people before they try to deduct that much from their taxes, check the IRS list of businesses that are expected to regularly receive tips," Hardt said.
Hardt warned that attempting to claim the tip deduction for a job not on the IRS list could trigger an audit.
Overtime pay also comes with a new deduction this year.
"To be clear, it's not all of the pay that you get from overtime, but if you get paid, say, time and a half, that half of time and a half can be deducted from your wages up to, I think, $12,500," Hardt said.
For filers who need help, free options are available. The IRS Free File program is open to people with incomes under about $89,000, and many nonprofits in Maryland offer free tax preparation, though appointments fill quickly.
Hardt also cautioned filers to be careful when choosing a tax preparer, particularly those who promise large refunds.
"What I found is that if a preparer is charging a percentage of the refund, that doesn't necessarily mean it's a scam, but it opens the door to a particular kind of scam where they will inflate the amount of the refund," Hardt said. "They get a big cut and then the IRS goes after the taxpayer, not the preparer, for the money that they actually owe."
One of the deadlines to file for the Homeowners Property Tax Credit also falls on Tax Day. The credit can help lower property tax bills for eligible homeowners. Applying by April 15 means the credit will be applied to the July tax bill. Filers who miss that deadline still have until Oct. 1 to submit an application.
Parents can also open "Trump Accounts" for their children this tax-filing season. Children born between 2025 and 2028 may qualify for a one-time $1,000 contribution from the federal government. Families can sign up when filing their taxes or through the IRS program website.
For more information on free or low-cost tax preparation services throughout Maryland, click here.