Split refunds help save.

• Position: TRENDS AND TRANSITIONS - Earned Income Tax Credit

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Beginning this year, the IRS will let taxpayers split refunds into as many as three different accounts. For example, a taxpayer could deposit half of his refund into a savings account and the rest into his checking account.

This option could be particularly useful to low-income families who are eligible for the Earned Income Tax Credit (EITC). It put more than $40 billion into the hands of low-income, working families in 2006. Now, those families will have an opportunity to put that money directly into their savings.

Designed to encourage work, the EITC is refundable and is even available to the self-employed. Refunds are based on the number of children in a household: $4,716 for a family with two or more qualifying children and an adjusted gross income (AGI) of $33,241; and $2,853 for a family with one qualifying child and an adjusted gross income of $37,783. Those without children who make less than $14,590 can claim $428.

Twenty-two states, plus the District of Columbia offer state earned income tax credits. These credits are refundable in all but Delaware, Maine and Virginia and are usually calculated as a percentage of the federal credit. Together, the federal and state credits represent a sizable refund for low-income working families.

STATE EARNED INCOME TAX CREDITS BASED ON THE FEDERAL EITC State Percentage of Federal Credit (Tax Year 2007, Except as Noted) Delaware 20% District of 35% Columbia Indiana (a) 6% Illinois 5% Iowa 7% Kansas 17% Louisiana 3.5% (effective in 2008) Maine 5% Maryland (b) 20% Massachusetts 15% Michigan 10% (effective in 2008; to 20% in 2009) Minnesota (c) Average 33% Nebraska 8% (to 10% in 2008) New Jersey 20% (to 22.5% in 2008, 25% in 2009) New Mexico 8% New York (d) 30% North Carolina (e) 3.5% (effective in 2008) Oklahoma 5% Oregon (f) 5% (to 6% in 2008) Rhode Island (g) 25% Vermont 32% Virginia 20% Wisconsin 4%--one child, 14%--two...