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Bridging the Gap Webinar Series, March 2010 Hillary Lazar, Benefits Outreach Coordinator, NHSA

Bridging the Gap Webinar Series, March 2010 Hillary Lazar, Benefits Outreach Coordinator, NHSA. MONEY THAT MATTERS Doing Tax Credit Outreach in the Workplace. Understanding the Basics: . Refundable Tax Credits. Refundable Tax Credits: What are they?. Non-refundable Taxes:

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Bridging the Gap Webinar Series, March 2010 Hillary Lazar, Benefits Outreach Coordinator, NHSA

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  1. Bridging the Gap Webinar Series, March 2010 Hillary Lazar, Benefits Outreach Coordinator, NHSA MONEY THAT MATTERS Doing Tax Credit Outreach in the Workplace

  2. Understanding the Basics: Refundable Tax Credits

  3. Refundable Tax Credits: What are they? • Non-refundable Taxes: • Reduces or eliminates taxes owed • No money back • Refundable Taxes: • Reduces or eliminates taxes owed • Leftover money back in cash refund

  4. Refundable Tax Credits: What are they? For example: $400 Taxes owed: $1000 Tax credit received: Cash I get back with a non-refundable credit: $0 Cash I get back with a refundable credit: $600

  5. Refundable Tax Credits: What are they? Income Taxes Owed Remaining Tax Credit Non-Refundable Tax Credit $1,000 - $400 = $600

  6. Refundable Tax Credits: What are they? Refundable Tax Credit Income Taxes Owed Remaining Tax Credit $1,000 - $400 = $600

  7. Refundable Tax Credits: What are they important? Three Reasons for Refundable Credits: • 1. Offset income and payroll taxes • 2. Supplement wages • 3. Provide a work incentive

  8. Refundable Tax Credits: Which credits are refundable? • Two Major “Refundable” Tax Credits: • 1. The Earned Income Tax Credit • 2. The Additional Child Tax Credit

  9. The Earned Income Tax Credit

  10. The Earned Income Tax Credit: What is it? • Largest Refundable tax credit • For low to moderate-income working families • For low-income individuals

  11. The Earned Income Tax Credit: Why is it important? The EIC Lifts More than 5 Million Above the Poverty Line.

  12. The Earned Income Tax Credit: Why is it important? • $8/hour job • $16,000 annual Boosts Workers’ Income: = $10+/hour job = $21,000+ annual

  13. The Earned Income Tax Credit: How much is it worth? For 2008: $48,279 $45,295 $40,463 $18,440 • Income limits for married workers are $5,000 higher than these amounts. • Investment income cannot exceed $3,100.

  14. The Earned Income Tax Credit: How much is it worth?

  15. The Earned Income Tax Credit: Other Criteria • Each child claimed must count as a “qualifying child” • Immigrant applicants must be legally authorized to work

  16. The Earned Income Tax Credit: Other Information Other Information

  17. The Additional Child Tax Credit (and other credits for working families)

  18. The Additional and Child Tax Credits: What are they? • CTC: Non-refundable tax credit • ACTC: Refundable tax credit • For low and moderate-income families • For families with children

  19. The Child Tax Credit: How much is it worth? $1000 for every “qualifying child” For families with annual income under: • $110,000 for married couples • $75,000 for single or head of household • $55,000 married filing separately

  20. The Child Tax Credit: Other Criteria • Filers must have children • Each child claimed must count as a “qualifying child” • Immigrant applicants and children must • have a valid ITIN

  21. The Additional Child Tax Credit: Other Information • Must have more than $3000 in taxable income • What it is worth: • Amount of credit leftover from the CTC • OR • 15% of taxable income after $3,000

  22. The (Additional) Child Tax Credit: Other information

  23. The American Opportunity Tax Credit (formerly HOPE) • Helps pay for college tuition and education-related expenses • Worth up to $2,500 • Partially refundable • Upto $1,000 can be claimed even if no income tax is owed

  24. The Making Work Pay Credit • Bonus for workers in 2009 (ARRA) • Most receive credit automatically in paycheck • Upto $400 for most ($800 for married couples filing jointly) • Income limits are $75,000 (single) and $150,000

  25. Child and Dependent Care Credit • Helps cover child care or caregiver expenses • Maximum expenses that can be claimed: • $3,000 for one dependent, $6,000 for two or more • Credit amount = 20 - 35% of expenses • – depending on income • In 12 states the credit is refundable

  26. Claiming the Credits

  27. Claiming the Credits: Means Filing Taxes! • Employees mustfile a tax return! • Form 1040 or Form 1040A – not 1040EZ • EIC - Schedule EIC • CTC - Form 8812 • For CDCC – Form 2441 • For AOTC – Form 8863 • For MWPC – Schedule M • Workers not raising children can file any form • Eligible workers can claim EIC and CTC refunds for up to 3 previous years.

  28. Claiming the Credits: Means Filing Taxes! • A copy of 2008 tax return • W-2 forms from all jobs. If you don’t have the W-2, bring final pay stubs, if available • 1099 forms for any other income • Any IRS notices received during 2009 • Proof of other income and expenses • Social Security Numbers for worker, spouse and any children born before 12/31/09 – for the EITC • Individual Taxpayer Identification Numbers (ITINs) documentation – for the CTC

  29. Claiming the Credits: Avoid Commercial Tax Preparers EITC Claimants • Average fees range from $85 - $120 for e-filing.

  30. Claiming the Credits: Avoid Refund Anticipation Loans • No guarantee refund will equal the loan amount. • High-interest loans – can be over 180 percent • Processing fee – can be $80 or more

  31. Claiming the Credits: Free Tax Preparation services • Volunteer Income Tax Assistance (VITA) • - Free preparation for low-income workers • - Sites across the country • - Volunteers trained under IRS guidance • - Taxpayers can receive refund in 7-12 • days through e-filing • Online Calculators

  32. Claiming the Credits: From Credit To Savings • Use Direct Deposit and Split refund to start saving money Outreach info and materials: www.splitrefund.net • File a W-5 for the advance EITC

  33. Tax Credit Outreach in the Workplace

  34. Workplace Outreach: Why Bother? EIC Eligible Workers 20 - 25% Do Not Claim EIC 75 – 80% Claim EIC = $8 billion

  35. Workplace Outreach: Why Bother?

  36. Workplace Outreach: You Don’t Have to be an Expert Youdo NOT have to be a tax expert to help families claim their credits. You have two jobs: • Raise Awareness 2.Connect them with the Experts and Enrollment Specialists

  37. Workplace Outreach: First Steps Self-Assessment: • What outreach works best for your organization? • Communication methods • Existing programs • What worked in the past • Special Considerations

  38. Workplace Outreach: Raise Awareness • Include fliers with paychecks/stubs or when distributing W-2s • Put up posters in the break room or bathrooms • Talk about credits during staff meetings • Offer to do one-on-one conversations about taxes and/or finances • Bring in a VITA volunteer counselor • for an information or enrollment session

  39. Workplace Outreach: How to Talk About Tax Credits Talking points to emphasize: • It’s for working families • They earned it – they should get it! • The financial crisis • It’s a simple process Use Language That’s Empowering.

  40. Workplace Outreach: Use Existing Resources • Contact a VITA Site: 1-800-906-9887 • Download EITC toolkits and resources • Access information online http://www.nationalassembly.org/FSPC/BridgingTheGap/EarnedBenefits.aspx http://www.irs.gov/app/understandingTaxes/student/tax_tutorials.jsp

  41. LEARN MORE! For more information about tax credit outreach or the Bridging the Gap Initiative please contact: Hillary Lazar, Benefits Outreach Coordinator – NHSA 202-347-2080 x10 • Ph 202-393-4517 Fax hlazar@nassembly.org

  42. POLL QUESTION: • How much do you know about the Earned Income Tax Credit? • A lot • Some • A little • Nothing • Unsure

  43. POLL QUESTION: • How much can the Earned Income Tax Credit be in cash back? • More than $5000 • Up to $5000 • Up to $2500 • Up to $1500 • Don’t know

  44. POLL QUESTION 6: • True or False: Children in immigrant families do not qualify for the Child Tax Credit. • True • False • Unsure

  45. POLL QUESTION: • How much do you know about the Child Tax Credit? • A lot • Some • A little • Nothing • Unsure

  46. POLL QUESTION: • Which of the following tax credits have you heard of? • The American Opportunity Tax Credit • The HOPE Credit • The Child and Dependent Care Credit • The Making Work Pay Credit

  47. POLL QUESTION: • Do you any concerns about doing outreach? • Not enough time – I’m busy enough as is • Money is a sensitive/private topic • Outreach means adding to the organization’s budget • I’ve done outreach – nothing works • All of the above • I don’t have concerns

  48. POLL QUESTION: • Why is tax credit outreach important? In other words, what brings you here today? • Want to offer more financial support to our workers • Not enough working families know about them • Times are tough for everyone, every penny helps • All of the above • Not exactly sure (ie. my boss asked me to sign up . . .)

  49. POLL QUESTION: • Have you heard of VITA sites? • Yes • No • Unsure

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