EITC and the IRS

1. EITC and the IRS • Leland Smith and Brian Cahill • IRS Seattle WA • Contact – Your Local Coalition’s Coordinator • Sylvia Martinez – IRS SPEC (206)220-5515 sylvia.L.Martinez@irs.gov

2. EITC and the IRS • Free tax Preparation in WA • IRS Staff & Functions • Reaching Low Income • Tax Credits and Financial Education

3. EITC aka EIC • Earned Income Tax Credit • Enacted in 1975 • Expanded in 1990, 1993, and 2009 (ARRA) • Refundable! • Parents with children & Low Income Singles • Offset Social Security Withholding FICA

4. EITC Expanded! The American Recovery and Reinvestment Act (ARRA) • Temporary (TY 09 10) increase in EITC • For taxpayers with three or more qualifying children. • Max EITC for this new category is $5,657

5. EITC Expanded! ARRA also upped the phase out for all married couples filing a joint return. Phase out: Begins at $21,420 for MFJ with children Gone at: $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For MFJ with no children, phase out starts at $12,470 and Completely phased out at $18,440.

6. Income Limits for 2009 • $43,279 ($48,279, MFJ) with 3 or more children • $40,295 ($45,295, MFJ) with 2 or more children • $35,463 ($40,463, MFJ) with 1 child • $13,440 ($18,440, MFJ) with no children

7. The Maximum Benefit for 2009 • $5,657 with 3 or more children • $5,028 with 2 or more children • $3,043 with one child • $457 with no children

8. EITC is one of the Largest Antipoverty Programs • 24 million received almost $48 billion for tax year 2007 • Participation is estimated at 75% to 80% • Five million people, half of them children, lifted out of poverty each year due to EITC • The cost of administering EITC program ratio to claims paid is less than one percent

9. Basic Qualifications • Have a valid Social Security number • Not file as “married filing separate” • Not file Form 2555 or Form 2555-EZ (related to Foreign Earned Income) • Meet the investment income limitation ($3,100 for tax year 2009) • Have earned income • Not be the qualifying child of another person • Be a U.S. citizen or resident alien for the entire year

10. Free Tax Prep in WA • Coalitions

12. Free Tax Prep in WA • Coalitions • VITA and Tax Aide • Nearly 72,000 returns total free returns, • Nearly 50,000 by Tax Aide • More than 10,000 Military VITA

14. IRS Staff & Functions • Data & Mapping

16. Dollars $695,716,346 5,349,297,531

17. EITC By Zip Code

18. IRS Staff & Functions • VITA and Tax Aide Site Set Up and Support • Volunteer Training • Tax Wise Software • Materials and tools

20. IRS Staff & Functions • VITA and Tax Aide Site Set Up and Support

21. IRS Staff & Functions • EITC Assistant

24. IRS Staff & Functions • EITC Central

25. EITC CENTRAL

27. Partner Page

32. EITC CENTRAL AGAIN

39. Reaching Moderate Income • Why the IRS needs your help.

40. Who are we missing? • Living in rural areas • Self-employed • Disabled • Childless  • Not proficient in English (LEP) • Older (grandparents) • Recently divorced, unemployed, or experienced other changes to their marital, financial or parental status

41. EITC By Zip Code Different Scale

43. Promote EITC • Insert tax credit information in monthly utility bills or online newsletters. • Incorporate tax credit information when promoting energy payment assistance programs. • Train customer service employees • Display posters • Alert your own employees • Support free tax preparation sites with printers, computers etc.

44. EITC and the IRS Tax Credits and Financial Education

45. Tax Credits and Financial Education • EITC as the “Lab” Portion of the Financial Literacy Class • The only way to claim EITC is to file a tax return.

47. Pub 4716

49. Publication 4537, EITC Made EZ bookmark Publication 4471, EITC Made EZ brochure Publication 73271N, Social Security Card Poster