eitc webinar
TRANSCRIPT
Catholic Charities USA Webinar:
The Earned Income Tax Credit
Information and Outreach
Catholic Charities USA Webinar:
The Earned Income Tax Credit
Information and Outreach
PresentersPresenters
• 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
• 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
AgendaAgenda
1. What is the Campaign to Reduce Poverty? Monica Maggiano
2. Introduction of EITC and Speakers Jane Stenson
3. Money Talks! Have you heard? John Wancheck Claim the Earned Income Credit
4. Questions and Answers5. IRS Amelia Dalton6. EITC outreach Claudie Burchfield7. Questions and Answers
1. What is the Campaign to Reduce Poverty? Monica Maggiano
2. Introduction of EITC and Speakers Jane Stenson
3. Money Talks! Have you heard? John Wancheck Claim the Earned Income Credit
4. Questions and Answers5. IRS Amelia Dalton6. EITC outreach Claudie Burchfield7. Questions and Answers
What is the Campaign?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!
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 AreasMain 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.
• 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
John Wancheck
Money Talks! Have you Money Talks! Have you heard?heard?
Claim the Earned Income Claim the Earned Income Credit Credit
Presentation by:Presentation by: John Wancheck John WancheckOrganization:Organization: Center on Budget and Policy Priorities Center on Budget and Policy Priorities
Outreach Kit!Outreach Kit! www.cbpp.org/eic2008www.cbpp.org/eic2008 Phone:Phone: (202) 408-1080 (202) 408-1080
Email:Email: [email protected]@cbpp.org
The Earned Income Credit (EIC)…The Earned Income Credit (EIC)…
Represents up to a 40% pay increase for Represents up to a 40% pay increase for some workerssome workers
Can turn an $8 per hour job into a $10 per Can turn an $8 per hour job into a $10 per
hour jobhour job
In 2005, raised 4.1 million individuals — In 2005, raised 4.1 million individuals — including 2.2 million children — above the including 2.2 million children — above the poverty line poverty line
The EIC: Making a DifferenceThe 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
An
nu
al In
com
e
Estimated Poverty Line for Family of
Two (including one child)$14,159
109%
89%
How Do Workers Benefit?How Do Workers Benefit?
Single parent, 2 children, earns Single parent, 2 children, earns $14,000 $14,000 Her EIC Her EIC = $4,716= $4,716
Single parent, 2 children, earns Single parent, 2 children, earns $18,000 $18,000 Her EIC Her EIC = $4,166= $4,166
Married workers, 2 children, earn Married workers, 2 children, earn $25,000 $25,000 Their EIC = $3,113Their 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
Cre
dit
Am
ou
nt
The Federal Earned The Federal Earned Income Credit in Tax Income Credit in Tax
Year 2007Year 2007Maximum 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
Two or more childrenNo children One child
Maximum benefit $428
$40,000
EIC Benefits for Tax Year 2007 EIC Benefits for Tax Year 2007 at Various Income Levels at Various Income Levels
20072007
household household incomeincome
EIC for single EIC for single workers not workers not
raising a childraising a child
EIC for single EIC for single workers raising workers raising
one childone child
EIC for single EIC for single workers raising workers raising
two or more two or more childrenchildren
$ 5,000$ 5,000 $384$384 $1,709$1,709 $2,010$2,010
$ 8,000$ 8,000 $349$349 $2,729$2,729 $3,210$3,210
$10,000$10,000 $196$196 $2,853$2,853 $4,010$4,010
$12,000$12,000 $43$43 $2,853$2,853 $4,716$4,716
$14,000$14,000 $0$0 $2,853$2,853 $4,716$4,716
$16,000$16,000 $0$0 $2,751$2,751 $4,582$4,582
$20,000$20,000 $0$0 $2,112$2,112 $3,740$3,740
Note: This is not a tax table. Do not use this table to complete income tax returns.
How Much Can Workers Earn and How Much Can Workers Earn and Qualify for the EIC?Qualify for the EIC?
The average refund amount for families is $2,280.The average refund amount for families is $2,280. Income limits for married workers who file their taxes jointly are $2,000 Income limits for married workers who file their taxes jointly are $2,000
higher than these amounts.higher than these amounts. Investment income cannot exceed Investment income cannot exceed $2,900.$2,900.
Number of Number of children:children:
Income Income less than:less than:
EIC up to:EIC up to:
1 child1 child $33,241$33,241 $2,853$2,853
2 or more 2 or more childrenchildren
$37,783$37,783 $4,716$4,716
No childrenNo children $12,590$12,590 $428$428
For tax year 2007:
Definition of a Definition of a “Qualifying Child”“Qualifying Child”
EICEIC
RelationsRelationshiphip
Son, daughter Son, daughter
Stepchild, adopted child, grandchild Stepchild, adopted child, grandchild
Brother, sister, stepbrother, stepsister (or Brother, sister, stepbrother, stepsister (or their descendents) their descendents)
Foster childFoster child placed by a government or placed by a government or private agencyprivate agency
ResidencResidencee
Must live with worker in the U.S. for more Must live with worker in the U.S. for more than half the year than half the year
AgeAgeUnder 19, or under 24 if full-time student, Under 19, or under 24 if full-time student, or any age if totally and permanently or any age if totally and permanently disableddisabled
Why is outreach needed?Why is outreach needed?
1.1. As many as 15-20% of eligible workers don't As many as 15-20% of eligible workers don't claim the EICclaim the EIC
2.2. 70% of workers who claim the EIC pay 70% of workers who claim the EIC pay commercial fees to file returns — can amount commercial fees to file returns — can amount to over $300 or more in fees, draining about to over $300 or more in fees, draining about $1.4 billion out of EIC refunds nationwide$1.4 billion out of EIC refunds nationwide
Includes the “unbanked”Includes the “unbanked”
Who’s Missing Out?Who’s Missing Out?
Workers at risk of missing out on the EIC include:Workers at risk of missing out on the EIC include: Parents just entering the labor force; self-employedParents just entering the labor force; self-employed New parents — incl. foster and adoptive, kinship careNew parents — incl. foster and adoptive, kinship care Divorced or separated parentsDivorced or separated parents Homeless workers; dislocated workersHomeless workers; dislocated workers Workers not raising qualifying childrenWorkers not raising qualifying children Parents with older disabled children Parents with older disabled children Workers who speak English as a second language Workers who speak English as a second language Workers not otherwise required to file a tax returnWorkers not otherwise required to file a tax return
For Tax Year 2007:For Tax Year 2007:
$8,750 - single $8,750 - single
$11,250 – head of household $11,250 – head of household
$17,500 - married$17,500 - married
Volunteer Income Tax Assistance (VITA)Volunteer Income Tax Assistance (VITA)
Provides free tax filing help for low-income Provides free tax filing help for low-income workers at community sites.workers at community sites.
o Sponsored by the IRSSponsored by the IRS
o In many communities across the country In many communities across the country
o Refunds deposited in 7-12 days through e-filingRefunds deposited in 7-12 days through e-filing Sites can help open bank accountsSites can help open bank accounts
Alternative to costly commercial tax preparation Alternative to costly commercial tax preparation fees and Refund Anticipation Loans (RALs)fees and Refund Anticipation Loans (RALs)
EIC Outreach CoalitionsEIC Outreach Coalitions
Choose strategy, themes and Choose strategy, themes and materials for tax season outreach materials for tax season outreach campaignscampaigns
Find partners to host Volunteer Find partners to host Volunteer Income Tax Assistance (VITA) sites Income Tax Assistance (VITA) sites
Recruit VITA volunteers as Recruit VITA volunteers as preparerspreparers
Organize training for volunteersOrganize training for volunteers Get information out to workers!Get information out to workers!
The Value of More PartnersThe Value of More Partners
Outreach coalitions divide campaign Outreach coalitions divide campaign tasks; takes advantage of partners’ tasks; takes advantage of partners’ special capabilities and avoids special capabilities and avoids duplicationduplication
Some partners are experienced Some partners are experienced reaching some parts of the reaching some parts of the community: community:
Ex. -- ethnic communities and Ex. -- ethnic communities and businesses, family day care businesses, family day care providers, people with disabilitiesproviders, people with disabilities
Making ConnectionsMaking Connections
Finding an Outreach CoalitionFinding an Outreach Coalition www.cbpp.org/eitc-partnership/directory.htmwww.cbpp.org/eitc-partnership/directory.htm Coalitions will have lists of VITA sites, flyers, etc.Coalitions will have lists of VITA sites, flyers, etc.
Finding VITA sites for referralFinding VITA sites for referral Individuals:Individuals: Call IRS 1-800-829-1040 Call IRS 1-800-829-1040
(voice-mail option #1, then #5, gets you (voice-mail option #1, then #5, gets you to an operator who has sites by to an operator who has sites by zipcode). zipcode).
GroupsGroups: call the IRS Territory Manager : call the IRS Territory Manager for a list for a list
www.cbpp.org/eic2007/territorymanager2007.pdfwww.cbpp.org/eic2007/territorymanager2007.pdf
EIC Impact in the EIC Impact in the CommunityCommunity
Caddo Parish, LACaddo Parish, LA 32% of all tax filers claimed EIC for 2004, bringing in 32% of all tax filers claimed EIC for 2004, bringing in
nearly $74 million, plus over $17 million through the nearly $74 million, plus over $17 million through the Child Tax Credit Child Tax Credit
If 20% of those eligible didn’t claim the EIC, nearly If 20% of those eligible didn’t claim the EIC, nearly $10 million from the EIC may have been left in $10 million from the EIC may have been left in Washington instead of benefiting Caddo Parish.Washington instead of benefiting Caddo Parish.
Tax Preparation Fees and LoansTax Preparation Fees and Loans 78% of Caddo Parish EIC filers used commercial 78% of Caddo Parish EIC filers used commercial
preparers – higher than national rate. preparers – higher than national rate.
About half of EIC filers also used expensive RALs.About half of EIC filers also used expensive RALs.
Local EIC Claims DataLocal EIC Claims Data
Brookings Institution interactive Brookings Institution interactive website website www.brookings.edu/metro/EITC/EITC-www.brookings.edu/metro/EITC/EITC-Homepage.aspxHomepage.aspx
Zip Code-level dataZip Code-level data
Statistics on EITC, CTC, RALs, Statistics on EITC, CTC, RALs, income levels of filers…..& much income levels of filers…..& much more…..more…..
Do the EIC/CTC Affect Other Public Do the EIC/CTC Affect Other Public Benefits?Benefits?
EIC: EIC: notnot income for specified federal programs income for specified federal programs including:including: Food stampsFood stamps MedicaidMedicaid SSISSI Veteran’s benefitsVeteran’s benefits Public housingPublic housing Head StartHead Start
States generally don’t count EIC for TANF or SCHIP. States generally don’t count EIC for TANF or SCHIP. Some count it for child care and energy assistance.Some count it for child care and energy assistance.
CTC:CTC:Not income for any federal, state or local program Not income for any federal, state or local program financed financed even in parteven in part with federal funds with federal funds
Resource rulesResource rules
Programs have different rules about how long Programs have different rules about how long the EIC or CTC refund can be the EIC or CTC refund can be savedsaved before it before it counts against program resource limits.counts against program resource limits.
All programs exclude EIC/CTC as a resource All programs exclude EIC/CTC as a resource for at least one month after the month the for at least one month after the month the refund is received.refund is received.
Food stamps – not counted for 12 monthsFood stamps – not counted for 12 months SSI — not counted for 9 months SSI — not counted for 9 months IDAs are a “safe harbor.”IDAs are a “safe harbor.”
Advance EIC: Get the Most out of Advance EIC: Get the Most out of Every PaycheckEvery Paycheck
Some workers raising children can Some workers raising children can get the Advance EIC in their get the Advance EIC in their paycheck and get a year-end paycheck and get a year-end refund too! refund too!
Increase take-home pay up to Increase take-home pay up to $130 p/month.$130 p/month.
Workers must file IRS Form W-5 Workers must file IRS Form W-5 with their employer to start with their employer to start Advance EIC payments.Advance EIC payments.
Additional Tax CreditsAdditional Tax Credits
Child Tax Credit (CTC)Child Tax Credit (CTC) The CTC is worth The CTC is worth up toup to $1,000 for each qualifying $1,000 for each qualifying
child child under age 17under age 17 Workers who earned Workers who earned more thanmore than $11,750 $11,750 in 2007 can in 2007 can
get a CTC refundget a CTC refund
Child and Dependent Care Credit (DCTC)Child and Dependent Care Credit (DCTC) Federal tax credit for expenses to care for a young Federal tax credit for expenses to care for a young
child, or a dependent with disabilities, in order to child, or a dependent with disabilities, in order to work. Credit only reduces income tax.work. Credit only reduces income tax.
Maximum expenses:Maximum expenses: $3,000 for one dependent, $6,000 for two or more$3,000 for one dependent, $6,000 for two or more
How Do Workers Benefit?How Do Workers Benefit?
Single parent, 2 children, earns Single parent, 2 children, earns $14,000 $14,000 Her EIC $4,716 + Her EIC $4,716 + CTC CTC $338 = 5,054$338 = 5,054
Single parent, 2 children, earns Single parent, 2 children, earns $18,000 $18,000 Her EIC = $4,166 + Her EIC = $4,166 + CTC CTC $938 = 5,104$938 = 5,104
Married workers, 2 children, earn Married workers, 2 children, earn $25,000 $25,000 Their EIC = $3,113Their EIC = $3,113 + + CTC CTC $2,000$2,000
= $5,113 = $5,113
IRS- EITCIRS- EITC
Amelia Dalton Senior Tax Analyst, Internal
Revenue Service
Amelia Dalton Senior Tax Analyst, Internal
Revenue Service
Spotlight on an AgencySpotlight on an Agency
Link between Financial Literacy and EITC
Claudie BurchfieldDirector of the Office of Economic
Opportunity in Murphy, North Carolina
Link between Financial Literacy and EITC
Claudie BurchfieldDirector of the Office of Economic
Opportunity in Murphy, North Carolina
Questions and AnswersQuestions and Answers
1-404-338-8945
1-404-338-8945
Thank you for participating!
Please complete the survey at the end of the webinar!
Thank you for participating!
Please complete the survey at the end of the webinar!