EITC Webinar

Catholic Charities USA Webinar: The Earned Income Tax Credit Information and Outreach

Presenters Monica Maggiano, Director, Campaign to Reduce Poverty in America Jane Stenson, Senior Director for Human Services John Wancheck, EIC Campaign Coordinator Center on Budget and Policy Priorities Amelia Dalton, Senior Tax Analyst, Internal Revenue Service Claudie Burchfield, Director of the Office of Economic Opportunity in Murphy, North Carolina

Agenda What is the Campaign to Reduce Poverty? Monica Maggiano Introduction of EITC and Speakers Jane Stenson Money Talks! Have you heard? John Wancheck Claim the Earned Income Credit Questions and Answers IRS Amelia Dalton EITC outreach Claudie Burchfield Questions and Answers

What is the Campaign? Goals Cut poverty in the United States by 50 percent by year 2020 Call upon the government to better serve the poor and improve public policies that strengthen and support families Educate policymakers and the public about the struggles of those living in poverty Engage those who are most impacted by government policies to be active participants in developing solutions to reducing poverty Partner with individuals, government, and organizations to address poverty in our country What can I do? Endorse the Campaign and take action!

Main Issue Areas Health Hunger Housing Family Economic Security Catholic Charities USA supports tax policies that strengthen low-income families and individuals and address the needs of the poor and the vulnerable. This includes expanding the Earned Income Tax Credit (EITC), which is widely credited with lifting millions of families and individuals out of poverty every year.

Money Talks! Have you heard? Claim the Earned Income Credit John Wancheck

Money Talks! Have you heard? Claim the Earned Income Credit Presentation by: John Wancheck Organization: Center on Budget and Policy Priorities Outreach Kit! www.cbpp.org/eic2008 Phone: (202) 408-1080 Email: [email_address]

The Earned Income Credit (EIC)… Represents up to a 40% pay increase for some workers Can turn an $8 per hour job into a $10 per hour job In 2005, raised 4.1 million individuals — including 2.2 million children — above the poverty line

The EIC: Making a Difference Helping working families out of poverty, 2007 Full-time Minimum Wage Job* (less withholding) $10,805 Full-time Minimum Wage Job* (less withholding) $10,805 Food Stamps $1,812 Food Stamps $1,812 EITC $2,853 Without EIC With EIC Annual Income Estimated Poverty Line for Family of Two (including one child) $14,159 109% 89%

How Do Workers Benefit? Single parent, 2 children, earns $14,000 Her EIC = $4,716 Single parent, 2 children, earns $18,000 Her EIC = $4,166 Married workers, 2 children, earn $25,000 Their EIC = $3,113

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 Credit Amount The Federal Earned Income Credit in Tax Year 2007 Maximum benefit $4,716 Note: Married couples with income in the phaseout range qualify for a higher credit than single parents — shown by dashed lines. Maximum benefit $2,853 Maximum benefit $428 $40,000 Two or more children No children One child

EIC Benefits for Tax Year 2007 at Various Income Levels Note: This is not a tax table. Do not use this table to complete income tax returns. $3,740 $2,112 $0 $20,000 $4,582 $2,751 $0 $16,000 $4,716 $2,853 $0 $14,000 $4,716 $2,853 $43 $12,000 $4,010 $2,853 $196 $10,000 $3,210 $2,729 $349 $ 8,000 $2,010 $1,709 $384 $ 5,000 EIC for single workers raising two or more children EIC for single workers raising one child EIC for single workers not raising a child 2007 household income

How Much Can Workers Earn and Qualify for the EIC? The average refund amount for families is $2,280. Income limits for married workers who file their taxes jointly are $2,000 higher than these amounts. Investment income cannot exceed $2,900. For tax year 2007: $4,716 $37,783 2 or more children $428 $12,590 No children $2,853 $33,241 1 child EIC up to: Income less than: Number of children:

Definition of a “Qualifying Child” Age Residence Relationship Under 19, or under 24 if full-time student, or any age if totally and permanently disabled Must live with worker in the U.S. for more than half the year Son, daughter Stepchild, adopted child, grandchild Brother, sister, stepbrother, stepsister (or their descendents) Foster child placed by a government or private agency EIC

Why is outreach needed? As many as 15-20% of eligible workers don't claim the EIC 70% of workers who claim the EIC pay commercial fees to file returns — can amount to over $300 or more in fees, draining about $1.4 billion out of EIC refunds nationwide Includes the “unbanked”

Who’s Missing Out? Workers at risk of missing out on the EIC include: Parents just entering the labor force; self-employed New parents — incl. foster and adoptive, kinship care Divorced or separated parents Homeless workers; dislocated workers Workers not raising qualifying children Parents with older disabled children Workers who speak English as a second language Workers not otherwise required to file a tax return For Tax Year 2007: $8,750 - single $11,250 – head of household $17,500 - married

Volunteer Income Tax Assistance (VITA) Provides free tax filing help for low-income workers at community sites. Sponsored by the IRS In many communities across the country Refunds deposited in 7-12 days through e-filing Sites can help open bank accounts Alternative to costly commercial tax preparation fees and Refund Anticipation Loans (RALs)

EIC Outreach Coalitions Choose strategy, themes and materials for tax season outreach campaigns Find partners to host Volunteer Income Tax Assistance (VITA) sites Recruit VITA volunteers as preparers Organize training for volunteers Get information out to workers!

The Value of More Partners Outreach coalitions divide campaign tasks; takes advantage of partners’ special capabilities and avoids duplication Some partners are experienced reaching some parts of the community: Ex. -- ethnic communities and businesses, family day care providers, people with disabilities

Making Connections Finding an Outreach Coalition www.cbpp.org/eitc-partnership/directory.htm Coalitions will have lists of VITA sites, flyers, etc. Finding VITA sites for referral Individuals: Call IRS 1-800-829-1040 (voice-mail option #1, then #5, gets you to an operator who has sites by zipcode). Groups : call the IRS Territory Manager for a list www.cbpp.org/eic2007/territorymanager2007.pdf

EIC Impact in the Community Caddo Parish, LA 32% of all tax filers claimed EIC for 2004, bringing in nearly $74 million, plus over $17 million through the Child Tax Credit If 20% of those eligible didn’t claim the EIC, nearly $10 million from the EIC may have been left in Washington instead of benefiting Caddo Parish. Tax Preparation Fees and Loans 78% of Caddo Parish EIC filers used commercial preparers – higher than national rate. About half of EIC filers also used expensive RALs.

Local EIC Claims Data Brookings Institution interactive website www.brookings.edu/metro/EITC/EITC-Homepage.aspx Zip Code-level data Statistics on EITC, CTC, RALs, income levels of filers…..& much more…..

Do the EIC/CTC Affect Other Public Benefits? EIC: not income for specified federal programs including: Food stamps Medicaid SSI Veteran’s benefits Public housing Head Start States generally don’t count EIC for TANF or SCHIP. Some count it for child care and energy assistance. CTC: Not income for any federal, state or local program financed even in part with federal funds

Resource rules Programs have different rules about how long the EIC or CTC refund can be saved before it counts against program resource limits. All programs exclude EIC/CTC as a resource for at least one month after the month the refund is received. Food stamps – not counted for 12 months SSI — not counted for 9 months IDAs are a “safe harbor.”

Advance EIC: Get the Most out of Every Paycheck Some workers raising children can get the Advance EIC in their paycheck and get a year-end refund too! Increase take-home pay up to $130 p/month. Workers must file IRS Form W-5 with their employer to start Advance EIC payments.

Additional Tax Credits Child Tax Credit (CTC) The CTC is worth up to $1,000 for each qualifying child under age 17 Workers who earned more than $11,750 in 2007 can get a CTC refund Child and Dependent Care Credit (DCTC) Federal tax credit for expenses to care for a young child, or a dependent with disabilities, in order to work. Credit only reduces income tax. Maximum expenses: $3,000 for one dependent, $6,000 for two or more

How Do Workers Benefit? Single parent, 2 children, earns $14,000 Her EIC $4,716 + CTC $338 = 5,054 Single parent, 2 children, earns $18,000 Her EIC = $4,166 + CTC $938 = 5,104 Married workers, 2 children, earn $25,000 Their EIC = $3,113 + CTC $2,000 = $5,113

IRS- EITC Amelia Dalton Senior Tax Analyst, Internal Revenue Service

Spotlight on an Agency Link between Financial Literacy and EITC Claudie Burchfield Director of the Office of Economic Opportunity in Murphy, North Carolina

Questions and Answers [email_address] 1-404-338-8945

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