Kilili: NMI residents must file income tax return to get EITC, child tax credit

To receive the Earned Income Tax Credit and the Child Tax Credit, residents of the CNMI must file an income tax return with the Commonwealth’s Division of Revenue and Taxation even if one owes no taxes, according to Delegate Gregorio Kilili C. Sablan (Ind-MP) over the weekend.

In his e-kilili newsletter, Sablan said the American Rescue Plan Act includes a permanent, 100 % payment of the EITC for those who file in the Marianas, and that 2021 is the first year this benefit is available.

He said the tax credit (maximum $6,728 is fully refundable.

Sablan

“In other words, any amount of the credit not used to pay your taxes is paid directly to you,” he said.

Sablan was able to include full and permanent federal funding for tax credit in the ARPA last year, a legislative proposal goal he first set in 2015 with the introduction of H.R. 4390.

In June 2021, then-acting governor Lt. Gov. Arnold I. Palacios signed into law House Bill 22-19, House Draft 1, that would repeal an existing law in order to make low-and-moderate income working families in the CNMI eligible for the EITC as a form or financial relief.

Rep. Christina E. Sablan (D-Saipan) filed the bill repealing the 100% tax on the EITC imposed by the Legislature in 1998. Rep. Angel A. Demapan (R-Saipan) managed to include an amendment to the bill to include a subsection to ensure that only the EITC law is being considered and does not include other excess credits outside of the EITC.

Sablan estimated last year that the annual value of the EITC is $25 million.

Last week, Finance Secretary David DLG Atalig disclosed to the media that the CNMI expects to disburse $50 million in EITC following the U.S. Treasury’s approval of the Commonwealth’s implementation plan.

Atalig said the Division of Taxation will soon release guidance on how qualified, low income families in the CNMI can apply for these credits.

EITC is an offset against taxes owed. A taxpayer who owes $100 in taxes and has a $70 credit would only have to pay $30.

Sablan also said over the weekend that fully refundable is the Child Tax Credit, which was increased to $3,000 per child (and $3,600 per child under age 6) in the American Rescue Plan.

“Up to half their money has already been paid out to eligible families in the Marianas, but to collect the rest of the Child Tax Credit it is absolutely necessary to file a 2021 tax return with the Commonwealth,” he said.

The delegate said eligible families that did not receive a partial payment will be able to collect the amount when they file their return.