Benefits of the Earned Income Tax Credit (EITC)

1. Benefits of the Earned Income Tax Credit (EITC) A Gateway to Self-Sufficiency Region IV, Southeast Quality of Life Conference July 12-14, 2011

2. What Is The Earned Income Tax Credit (EITC)? • A federal tax benefit to help low- and moderate-income families and individuals increase their financial stability. • Reduces taxes for workers • Supplements wages • Makes work more attractive than welfare • Fully refundable credit

3. Why Is The EITC So Important? • EITC remains the single largest federal aid program for working families. • EITC provides more $$ to working families than all other federal programs combined. • EITC is the most effective method to pull a low-income family out of poverty (in 2010, this was 5 million + households, including 2.6 + million children).

4. Helping Working Families Out of Poverty, 2010 Estimated 111% Poverty Line for Family of EITC Two 91% $2,300 (including one child) Food Stamps Food Stamps $14,698 $1,884 $1,884 Annual Income Full-time Minimum Full-time Minimum Wage Job* (less Wage Job* (less withholding) withholding) $11,451 $11,451 Without EITC With EITC Did You Know…? Volunteer Income Tax Sites

5. EITCImpact in Georgia For Tax Year 2010: • 975,000 + households in Georgia received the EITC • $2.3 billion + - total EITC received by Georgia taxpayers • $2,300 + – average amount of EITC per return

6. Why is Outreach Needed? EITC Eligible Workers 20 - 25% Do Not Claim EITC 75 – 80% Claim EITC

7. Why is Outreach Needed? • The IRS estimates that 20-25% of qualifying workers miss out on the EITC. • In Georgia, this equates to 250,000 – 300,000 families that are not receiving the EITC. • Families and individuals that are receiving the EITC: • 30% are using free filing programs or self-preparation • 70% are using high-cost commercial tax preparation services • Those households that use commercial preparers are spending hundreds of dollars in tax prep fees and e-filing charges.

8. EITC Increases For Tax Filing Year 2011: • Investment income cannot exceed $3,120.

9. Who Qualifies for the EITC? • Families and individuals who: • Have a social security number (every household member) • Work full-time, part-time or self-employed • Meet income guidelines • Eligible children must be a “qualifying child” (age, residency, and relationship tests) • Some very low-income workers without a “qualifying child” may be able to claim the EITC

10. How Do You Claim the EITC? • You must file a federal tax return: • If you have children: • Form 1040 or Form 1040A – not 1040EZ • EIC – Schedule EIC • If you do not have children: • Form 1040, 1040A, or 1040EZ • EIC – Schedule EIC • Eligible workers can claim EITC refunds for up to 3 previous years. • Remember: To be EITC-eligible, must have a SSN, earned income, and meet income guidelines. Children must meet qualifying tests.

11. What Is Being Done In Georgia?

12. Volunteer Income Tax Assistance (VITA) • VITA is an alternative to high-cost commercial tax preparation services. • VITA provides FREE tax preparation services to households that earn less than $49,000 • Volunteer-driven program. Volunteers are IRS-certified. • Objectives of VITA: • Promote tax understanding/awareness • Prepare accurate returns free for qualified taxpayers • Encourage personal asset-building through tax incentives

13. Volunteer Income Tax Assistance (VITA) • IRS partners with local Coalitions and organizations to provide this service. • Site locations – libraries, malls, community centers, schools/colleges, social service organizations. Locations where the target population feels safe. • VITA services complement the services offered by the host site. These services can include: • Educational and counseling programs • Small business start-up and financial assistance • Homeownership programs and financial assistance • Job skills training • Benefit screening (SNAP/food stamps, TANF, WIC, LIHEAP, etc.)

14. What’s Going On In Georgia • 300 VITA/TCE sites in Georgia • 76 Counties have VITA/TCE sites • 1,400 volunteers • 120 site coordinators • VITA program activity (2011): • Returns E-Filed: 67,100 • Total EITC Dollars: $17,223,100 • Total Refund Amt: $72,392,800

15. EITC Coalitions in Georgia • Savannah Coastal Empire Asset Development Coalition Bryan, Chatham, & Effingham Counties. 1816 Abercorn St (912)-447-5577 Contact: Teinique Gadson, Director, Neighborhood Improvement Association. Relationship Manager: Ken Brown • Southeast-Coastal Georgia EITC Coalition (Brunswick) Glynn, Camden, McIntosh Counties Relationship Manager: Latisa Steele • Atlanta Prosperity Campaign (Atlanta) • Chattahoochee Valley VITA Coalition (Columbus) • Greater Athens Economic Development Coalition (Athens) • Macon EITC Coalition (Macon) • The Children’s Initiative (Waycross) • South Central Georgia Asset-Building Coalition (Valdosta)

16. How Can HUD Agencies in Georgia Get Involved With VITA and EITC?

17. How You Can Get Involved • Conduct an open dialog (all year long) with your clients: • Demonstrate how the EITC, SNAP/food stamps, and other economic supports can help their family • Encourage clients to use the free tax preparation services at local VITA sites, if available • Discuss alternatives to high-cost refund anticipation loans (RALs) • Educate clients on the out-of pocket costs associated with commercial tax preparers • Open a VITA site in your local HUD offices • Get involved with your local EITC Coalition (if one doesn’t exist, help create one)

18. For More Information On VITA & EITC • Assigned Atlanta & Rome Yolanda Weaver / Kimberly Lovett • Assigned Augusta & Athens Remonia Brown / Marian Lee • Assigned Macon, Valdosta & AARP Lucy Atkins / Ariana Sanders • Assigned Columbus & Albany Joanne Butler / Yvonne Davis • Assigned Savannah-Brunswick-Statesboro Kenneth Brown / Latisa Steele

19. Thank You! Kenneth Brown (Savannah Area) Senior Stakeholder Relationship Tax Consultant W&I Wage & Investment Division 912-651-1422 kenneth.brown@irs.gov www.irs.gov Latisa Steele (Brunswick Area) Senior Stakeholder Relationship Tax Consultant Latisa.steele@irs.gog 912-651-1163