Module 3, Lecture 4

PAF 101

“Do not confine your children to your own learning, for they were born in a different time.”

–Hebrew Proverb

Class Agenda

AnnouncementsTrend Line OverviewChanging Federal Policy Problem Solving SU through policy

We Want You To Be A TA! & Maybe Coplin Wants You Too!• Get Real Life Experience• Get three Maxwell Credits• Learn how to be a GREAT

employee • Must have at least a 3.0

cumulative GPA and receive at least an A- in PAF 101

Apply by March 17th

Interviews are March 20th, 23rd, 25th

Questions? Email Lily Kim at lhkim02@syr.edu

Competition Points

As of 2/27/2015

WinnersWinners

Group # Points

14 18

4 15

17 14

1 13

2 13

15 13

18 13

12 12

13 12

8 11

11 11

5 10

10 10

6 9

3 9

16 8

7 8

9 6Losers

Earned Income Tax Credit (EITC)

Presented by: Maggie TarasovitchFebruary 27, 2015

About Me• Junior Policy Studies Major

• PAF 315 TA

• Background of the project• Coplin in 315• Started in December

Questions?Maggie Tarasovitchmntaraso@syr.edu

The EITC Law•“The federal earned income tax credit (EITC) reduces the amount of taxes owed, and refunds the difference if the credit is larger than the amount owed.”

(Center on Budget Policy Priorities website)

Basic Facts • The tax helps the “working poor,” those tax payers whose limited work hours and low wages keep them in the low-income tax bracket

• The refund depends on a tax payer’s:1. Adjusted Gross Income (AGI), which is

gross income minus specific deductions* that a tax payer is eligible to take

2. The number of (qualifying) children

• Common examples of deductions are “alimony payments made to a former spouse, contributions to certain retirement accounts (such as a traditional IRA) and the deduction for tuition and fees.” (Turbotax website)

Basic Facts

 

AGI must be less than… (Single)

AGI must be less than… (Married,

jointly filed)

Maximum Credit

Possible

Status      No Qualifying Children

$ 14,820

$ 20,330

$ 503

One Child $

39,131 $

44,651 $

3,359

Two Children $

44,454 $

49,974 $

5,548 Three or more Children

$ 47,747

$ 53,267

$ 6,242

Eligibility based on AGI and Number of Children(Tax Filing for the Work Year 2014)

Basic Facts • EITC is acquired when tax payers fill out regular tax returns and complete an additional seven lines of information

• Earnings do not include social welfare program, dividends, interest, and capital gains.

• Earnings do include wages earned from self-employment income and regular income

• Full or part time work

Example Family: Jessica Smith Jessica Smith works as a cashier at McDonalds. She is a single-mother of two children.

FACTS:

• Food-preparation sector employs 11 million people

• Accounts for about 1 in every 11 jobs

• Provided a median wage of only $9.09 an hour

• Jessica, as full-time, year-round worker (at $9.09/hour) makes annual earnings of $18,180.

(Center on Budget Policy Priorities website)

Example One:

Based on our example family, “Jessica Smith.”

Federal Tax Withholding“Qualifying persons who file federal tax returns get back some or all of the federal income tax withheld from their pay during the year. Even workers whose earnings were too small to have taxes withheld can get the EIC.”

Jessica had: 907.50+ 1365.752,273.25 in taxes withheld during the year.

Thus her “extra income” is essentially: 5,387 ----> Full Amount she gets back from EITC - 2,273 ----> Amount withheld in taxes this year $ 3,114

How much Jessica gets paid an hour

$18,180 ----> Salary During the Year+$3,114 ----> “Extra Income” back from Government$21,294 ----> Total End of Year Earnings

2,000 total hours/yr

$21,294 / year

÷ 2,000 hours/ year

$10.65 /hour

Additional Facts• The EITC may be paid as a lump-sum refund at the end of the year (after submitting taxes) or as an advance payment option.

• Most families decline the advance payment option because of variability in earnings throughout the year, which may lead to repaying the government

• A study shows that groups who may be unaware of the credit but are eligible include:

o very poor parentso those whose primary language is not English

History 1975: EITC is proposed by Nixon but created and signed by President Ford in order to help alleviate the burdens of social security and Medicare taxes for low-income workers

1970s - 2008: The credit is made permanent, adjustments were made regarding categories, the percentage of credit, and those eligible for the credit

2013: Congress extended the 2009 American Taxpayer Recovery Act through 2017

• The 2009 Act essentially extended the EITC and added the “third tier,” or level to help families with more than two children

Impact• In 2013, about 6.2 million people were lifted out of poverty, including about 3.2 million children.

• Studies suggest that the EITC “increase(s) aggregate hours worked. Thus, EITC seems to promote one broad goal of welfare reform— encouraging work among single-parent families— without reducing overall hours worked” (Beverly, 2002).

•“What research has shown, however, is that most EITC recipients only get the credit for two consecutive years or less. Many of them soon move up the income ladder and start paying taxes back into the system.” – The Washington Post

•The EITC reduced federal tax revenue by $59 billion in 2012 whereas the cost of Supplemental Nutrition Assistance Program (food stamps) was $80 billion (Hungerford, 2013).

Federal vs. State• 24 states and the District of Columbia administered their own state EITCs (2014)

•When you apply for the Federal EITC, you are automatically enrolled for the State

•Federal refunds faster (about 2 weeks), and the State takes a little while longer

•States typically calculate EITCs as a fixed percentage of the federal credit

o Percent of Federal Credit for NYS: 30%

How do citizens apply for EITC?

•“VITA is a free, IRS-sponsored program to help low and middle-income workers have their federal and State personal income taxes prepared and filed electronically at no cost.”

•“VITA also ensures that workers receive all the tax credits to which they are entitled.”

(New York State website)

History of VITA• Gary Iskowitz at California State University Northridge started program with his accounting students to help the local community

• Originated with the Tax Reform Act of 1969 as part of the increased emphasis on taxpayer education programs.

• 2007: IRS VITA Grant is created to provide funding to partner organizations, which enables Volunteer Income Tax Assistance (VITA) sites to extend services

• Heighten quality control, improve accuracy of returns, enhance volunteer training

For-Profit versus VITA

EITCoutreach.org

Why VITA Helps• Individuals save by not paying for tax preparation

• Electronic filing is increasing at VITA sites and allows workers to get their money faster

• Tax preparation volunteers are well trained and reduce the error rate

VITA in Syracuse

The Problem•Too few eligible citizens file for the EITC in Onondaga County

Evidence Total Filers in Onondaga County in 2013: 211,656

Filers that are eligible for VITA services: 133,492 (63.07%)

Eligible Filers that used VITA services: 7,249 (5.43%)

Unknown Percent: Private sector filing of the tax returns, individual filing

* Those who are eligible are files who reported an adjusted gross income of less than $53,000

**Data are based on last year’s tax return season Data are from the United Way, who received the data from the IRS

VITA in Syracuse: CA$H Coalition• CA$H stands for Creating Assets, Savings and Hope

• Apart of the United Way

•The primary focus is to collaborate with as many Onondaga County VITA site providers as possible in order to expand the scope and the efficiency of the VITA efforts in our region.

Value of EITC in Syracuse Value of Federal EITC :

All County: $ 3,097,509

CA$H sites only: $ 2,576,685

Value of Fed & State EITC: All County:

$4,130,012

CA$H sites only: $3,435,580Average Refund per Filer:

All County: $ 1,264CA$H sites: $ 1,620

*2013 data

What Have We Done?

What We’ve Done Learning as much as possible & Don’t re-create the wheel

• Community Outreach

• Hands- On LearningVolunteer at VITA siteProvide Expertise (public relations, surveys)

• Learn About PolicyLeMoyne College Tax Accounting CourseSyracuse University’s policy

Causes of low EITC/VITA rates• Not enough volunteer tax preparers

• Not enough VITA sites

• Lack of knowledge among potential participants

• People resist change

*Information is based on conversations with Site Coordinators and United Way

* No “hard” data

Hands-On• Emailed every Site Coordinator at CA$H Coalition VITA sites

• Ask about the causes

• Ask, “How can we help you?”

• In-take Volunteer

*not a CA$H site

• Create Press Release• Create Exit Survey• Recruit Volunteers

Policy: Le Moyne CollegeLe Moyne:

• Undergraduate students take a three credit ACT-301 Individual Income Tax

•Requires: 8 hours of volunteer work as part of students’ grades

•There are 56 students enrolled in the course this year. The rest of the accounting department is welcome to volunteer however it is not required. 

• Graduate student is the coordinator who organizes the site, 5 tax preparers, one greeter, and one quality reviewer

Policy: Syracuse Beta Alpha Psi Syracuse Univeristy:

•Beta Alpha Psi honor society for accounting students has 60 – 70 members

•VITA Coordinator April GU:o “Our volunteers are BAP members who are willing to

offer advice on filing tax returns and they do not do the actual tax return for people.”

o Program involves one-on-one education for students and SU community on how to complete tax returns

o March 27th and April 3rd in Whitman.

Spring 2015• Continue to learn as much as possible

• Push as many fliers out into the community as possible

• Volunteer / observe the SU site

• Connect with Sites at the end of Tax Season (April 15th) to address which areas are top concerns for next year

• Work with Whitman to get more accounting students on board– IMPRESS program?

• Create a 10 month plan: June 2015 – April 2016

Fall 2015Goal: Increase the number of Onondaga County citizens who use VITA sites to get

their taxes completed

Steps: Increase the number of Syracuse University students who volunteer at VITA

• Train Tax Preparers• Train CA$H Coaches

Create an SU VITA site for SU employees?

On-Going Project• Interested students should contact Ben Wahl after class

• Name and Email Address

• Could be this semester or next semester

Looking to get involved?•Three volunteer positions include:

o 1199/SEOC GreeteroCA$H Coacho Tax Preparer (possibly)

*Would count for your required 5 volunteer hours

For next class…Paper due 3/18Email TA societal problem with geographic location by 8pm tonight

VITA in Syracuse: CA$H Coalition•There are three parts to the sites o Preparing taxes o CA$H Coach Volunteer gives Financial

Education Literacy o Other providers of opportunities for low

income citizens: health insurance navigators, credit unions, etc.

VITA in Syracuse: CA$H Coalition These are the sites:• Shopingtown Mall *P.E.A.C.E.*• Syracuse Education Opportunity Center• Assisi Center• St. Albans church• Beauchamp Library (Onondaga County Library)• Le Moyne College Library

Hands-On

Public RelationsKatie Grant working with CA$H Coalition

• Volunteer Coordinator

• Re-create marketing pieces• Which are

“appointment-only?”

• Too much information / cluttered

OLD FLYER

Front Back

NEW FLYER

1199/SEOC Greeter: Requires a quick 10 question quiz online (I've taken it. It's easy. "Codes of Conduct.")(1) Greet patrons as they walk in. (2) Being friendly, saying hello, distributing the first bit of paperwork the patrons must fill out, and answering questions

CA$H Coach: Requires a quick 30 minute orientation. (1) Greet clients at the VITA site and explain the resources sheet (2) Help VITA participants complete the Saving Plan form (3) Potentially answer some basic questions about accounts, money, and ways to save

Tax Preparer: This role requires you to become IRS certified. (1) Process can take about 8 hours. (2) Reading information online and passing two "exams." There are sets of practice questions to help you. (3) Once this is complete, you volunteer at the VITA sites and help the low-income individuals file their taxes(4)This requires the most work, but it would look great on a resume

Current Positions

Thank you.