Money in the Right Pockets
Anna, a single mother of six, is a graduate student earning $17,000 a year. Even with child care assistance and help from her family, she struggles to pay her bills every month. But her financial burden lightened considerably when she received a refund of more than a quarter of her income through IRS’ Earned Income Tax Credit.
Last year more than 26 million people received nearly $59 billion under the EITC. Let’s give those statistics some flesh and blood: because of the EITC, 6.6 million people--half of them children--were actually lifted out of poverty. Without EITC, the poverty rate would have increased by 18 percent. That makes EITC one of the most important anti-poverty programs in America.
Yet, the IRS estimates that up to a quarter of those eligible for the credit do NOT claim it—mostly because they simply don’t know about it.
That’s why I went to Worcester, MA, last week for a national event to promote the Earned Income Tax Credit. You may be wondering what ACF has to do with an IRS program. The answer is that financial literacy and asset development are critical initiatives at ACF—and a pivotal part of our effort to foster healthy, independent families and communities. What’s more, many of those eligible for EITC are served by ACF programs.
Case in point: Beverly Jones (pictured above on the left with IRS official Deborah Holland). I got the chance to meet this single mother of three at the Worcester event. When Beverly was going through tough times, she enrolled her children in the Worcester Community Action Council’s Head Start program for support during her unemployment. Luckily for Beverly, she was referred to WCAC’s main Worcester office where there was an opening for a receptionist. Last year, Beverly had her taxes done through WCAC’s EITC Program and used the EITC refund to pay off her bills. Beverly is now “debt free.”
Examples like Beverly’s are the reason ACF has joined our partners at the IRS to make sure that these families know about and take full advantage of the tax credit.
ACF-funded community action agencies throughout the country are helping their low-income working clients understand that they may qualify for a substantial tax refund under the EITC and connecting them with free tax preparation, either onsite or online.
Our partnership with the IRS is a perfect example of how government agencies can collaborate, overcoming bureaucratic barriers to accomplish something very important—helping families hold on to more of their hard-earned cash and use it to climb out of poverty. I believe that the more money families can keep in their own pockets, the more effective we are in educating folks to handle their finances over the long run, the more self-sufficient and secure they will be—and that’s the goal ACF works to achieve every day.
Find out if you qualify for the EITC, or call 1-800-TAX-1040. To learn about free tax preparation, call 1-800-906-9887.