Victimization Theories

Report
Promote the Earned Income Credit
And Child Tax Credit
Date: Tuesday, February 26, 2013
Presentation by: Roxy Caines
Organization: Center on Budget and Policy Priorities
Phone: 202-408-1080
Email: [email protected]
Web: www.eitcoutreach.org
1
What are the Earned Income Credit
(EIC) and the Child Tax Credit (CTC)?
 Federal tax benefits for low-income working families and individuals
Purpose:
 Offset income and payroll taxes

Supplement wages

Provide a work incentive
Key Features:
 Reduces taxes workers may owe

Even if workers don’t owe taxes, they may be eligible

Some families can claim both credits
2
Tax Credits: Reduce Poverty
The EIC & CTC Lift More than 9 Million
Above the Poverty Line
2011
3
Tax Credits: Making a Difference
4
Why Conduct Tax
Credit Outreach
Activities?
5
Why is Outreach Needed?
EIC Eligible Workers
80% Claim EIC
20% Do Not
Claim EIC
6
Why is Outreach Needed?
Over $10 billion in EIC refunds may
have gone unclaimed in 2010
Efforts are needed to ensure eligible workers
know how to claim the EIC and other tax credits.
7
How Much Can Workers Earn and
Still Qualify for the EIC?
For Tax Year 2012:
Number of
children:
Income less than: EIC up to:
3 or more children
$45,060
$5,891
2 children
$41,952
$5,236
1 child
$36,920
$3,169
No children
$13,980
$475

Income limits for married workers are $5,210 higher than these
amounts.

Workers not raising children must be between the ages of 25
and 64.

Investment income cannot exceed $3,200.
8
The Federal EIC in Tax Year 2012
9
How Much Can Workers Earn and
Qualify for the CTC?
Workers who earned more than $3,000 in
2012 can get a CTC refund.
Income less than: Filing status:
$110,000
Married
$75,000
Single or Head of
Household
$55,000
Married filing separately
The CTC is worth up to $1,000 for each qualifying child.
10
Who Qualifies for the EIC and CTC?

Workers who are:

Working full-time, part-time or self-employed

Also receiving public benefits

Single or married

Raising a “qualifying child”


Some very low-income workers without a “qualifying child” may
be able to claim the EIC
Immigrants legally authorized to work
CTC ONLY:

Immigrant workers with Individual Taxpayer Identification
Numbers (ITINs)

Some non-custodial parents
11
Definition of a “Qualifying Child”
EIC
Relationship
CTC
Son, daughter, grandchild, stepchild, adopted child, brother,
sister, stepbrother, stepsister (or their descendents) or
foster child placed by a government or private agency
Residence
Must live with worker in the U.S. for more than half the
year
Age
Under 19 or 24 if full-time
student or any age if totally
and permanently disabled
Under 17

If you are a qualifying child, you cannot claim the EIC yourself.

If a child is claimed for both the EIC and CTC, the same worker
must claim both credits.
12
Do the EIC & CTC Count as
Income for Other Public Benefits?

No federal tax refund counts as income for any
program with federal funding

Refunds that are saved do not count against
resource limits for 12 months after the refund is
received
13
How do Workers Use
the Tax Credits?
14
Workers Use the Credits to…
Child Care
Auto Repairs
Rent & Utilities
Basic Needs
Transportation
Medical Expenses
The credits help workers keep working and
care for themselves and their children.
15
How do the Credits
Work?
16
What Counts as Earned Income?
Includes:

Wages, salaries, and tips

Net earnings from selfemployment

Union strike benefits

Employer-paid disability
benefits

Military combat pay
Doesn’t Include:

Non-taxable earned income
 Payroll deductions for dependent
care or retirement plans

Public benefits
 Social security, SSI, welfare

Other income, such as:
 Unemployment
 Alimony and child support
 Interest on bank accounts
 Investment income
17
Meet Maxine
Maxine is a single mom raising a 6-year old son.

She earns $19,000 this
year.

$270 in income tax has
been withheld.
18
Question:
How much is Maxine’s total refund?
A. Less
than $1,000
B. $2,000
- $3,000
C. $3,000
- $4,000
D. $5,000
or more
19
Maxine’s Tax Refund
EIC
$ 2,864
CTC
+ $ 1,000
Total Tax Benefit
$ 3,864
20
How Do You Claim the Credits?

You must file a tax return!



Form 1040 or Form 1040A – not 1040EZ
EIC - Schedule EIC
CTC - Schedule 8812

Workers not raising children can file any form

Eligible workers can claim EIC and CTC refunds
for up to 3 previous years
21
Filing for Free
22
The High Cost of Commercial
Tax Preparation
 When it’s time to file a tax return, many workers seek
help from a commercial tax preparer.
EIC Claimants
 Average fees range from $85 - $120 for e-filing.
23
What are RALs & RACs?
Refund Anticipation Loans (RALs)

Very high-interest loans
 Interest rate can be > 180 percent; processing fee can
be $80 or more

No guarantee refund will equal the loan amount
Refund Anticipation Checks (RACs)

Replacing usage of RALs
 Temporary bank account established to receive refund
and issue as a check

No faster than direct deposit
24
Are There Alternatives to RALs and
Commercial Tax Preparation?
Volunteer Income Tax Assistance (VITA)
 Free tax filing help for low-income workers at community
sites. IRS Toll-free Locator: 1-800-906-9887
 In many communities across the country
 Volunteers are trained under IRS guidance
 Taxpayers can receive refund in 7-12 days through e-filing
 VITA and TCE sites are listed at www.irs.gov (key word
search “VITA sites”)
25
How Can You Conduct
Tax Credit Outreach
Activities?
26
NAACP Units & State Conferences
Can Help Promote the Tax Credits

You do NOT have to be a tax expert to help families
claim their credits.

Incorporate outreach activities into your routine work –
and encourage your partners to do the same.

Build partnerships to expand your outreach efforts.
27
Notify Workers in the Community

Alert workers about the EIC and CTC and provide the
basic information they need:





Print messages about the tax credits and free tax filing
assistance



Eligibility guidelines
How to find tax forms
VITA site locations
Help getting an SSN or ITIN
Newsletters
Outreach materials
Provide referrals to existing free tax preparation sites
28
Inform & Engage Your Network

Feature the tax credits as the topic at your next
meeting or training session

Use technology


Add a button/ badge and link to your website
Include the tax credits in your electronic signature and invite
others to do the same. Examples:




Help working families get all the money they earned!
The Earned Income Credit is a tax benefit for people who work. Tell workers
how to claim it and other valuable tax credits that may provide a financial
boost.
Do you know about tax benefits for people who work?
Share resources that partners can pass on to others



Tax Credit Outreach Website
Quick Guide to Popular Online Resources
Outreach materials: posters, flyers, envelope stuffers
29
Collaborate with Community Groups

Inform partner agencies about the EIC and CTC

Partner with organizations that provide other resources
and services

Public benefits, housing assistance and family counseling
programs

Coordinate a free tax help day or tax credit awareness
event

Invite partners to share tax credit messages on social
media platforms

Sample messages for FaceBook & Twitter
30
Connect with a Tax Credit
Outreach Coalition

There may be one in your area!

The National EITC Partnership website:
www.cbpp.org/eitc-partnership


Directory of local partnerships by state

Spreadsheet with coalition members and the chairperson to contact

Goals and activities of the coalition
IRS Territory Manger contact
31
The Center on Budget and Policy Priorities’
National Tax Credit Outreach Campaign Can:

Deliver technical assistance and support

Present more in-depth training about the tax credits
and conducting local outreach activities

Connect you to online resources:

Tax Credit Outreach Kit

EIC/CTC flyers in 21 languages

Envelope Stuffers

Color Posters

EIC Estimator

Searchable Outreach Strategies Database

Sample Press Release

EIC & CTC FAQs and much more!
www.eitcoutreach.org
32
33
Use the Brookings Institution EITC
Website to Localize Your Efforts
www.brookings.edu/projects/EITC.aspx

All filers OR all EITC filers

Zip Code-level data

Search by counties, municipalities, districts, etc.

Multiple variables

Tax Year 2010 on website now
34
Question:
What is the first thing you will do
to promote the EIC, CTC and free
tax filing assistance?
A.
Distribute information to workers (flyers, envelope stuffers,
post cards or newsletters)
B.
Share resources with partners at a meeting or electronically
C.
Post outreach info online through social media platforms
D.
Volunteer at a VITA site and encourage others to do the same
E.
Partner to coordinate a free tax help day or awareness event
F.
I do not plan to promote the EIC, CTC and free tax filing
assistance at this time
G.
Other
35
Q&A
36

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