Head Start VITA Pilot Program is a Success

Region 2 partnered with the New York City Office of Financial Empowerment and the Food Bank for New York City to expand free tax preparation services for low-income families. Region 2 partners participated in a Head Start tax pilot program using the infrastructure and technical assistance provided by Food Bank, a local Volunteer Income Tax Assistance (VITA) partner.  VITA, a nationwide IRS program, offers free income tax preparation to people who make $51,000 or less and need assistance with filing their returns.

The Head Start VITA Pilot outreach efforts potentially reached 1,000 low-income families.  Two Head Start programs, the Children’s Aid Society and Kingsbridge Heights Community Center Head Start, participated in the pilot project. Once concluded, we contacted various stakeholders after the April 15th tax return filing deadline to learn about and document the participants’ experiences and the pilot’s successes and challenges. Leaders who forged the Head Start VITA partnership will use this information to establish best practices and an expansion strategy for future tax seasons.

Head Start was a natural partner for VITA because many of the families are low-income and they met income requirements for free tax prep services. The Children’s Aid Society and Kingsbridge Heights Community Center Head Start Programs operated Virtual VITA intake sites from which Head Start staff submit filer information electronically to a remote Food Bank tax preparer. The Food Bank receives information in digital format, completes and sends most income tax returns back to the intake sites within a day. Head Start partners received promotional materials from the Office of Financial Empowerment and Food Bank, and distributed the flyers to families and community members.

“We are also in the business of fighting poverty and this is one of the ways to get families thinking about long range planning,” said Jessica Schachter of Children’s Aid Society.

The Food Bank is the city’s largest VITA provider and one of the largest non-military VITA providers in the nation. They train IRS-certified volunteers to complete income tax returns for program participants such as our Head Start families, staff and their community members. A majority of the volunteers speak Spanish; others speak two or more languages which is crucial to serving New York City’s diverse population. German Tejeda, Senior Director of Tax Services at the Food Bank, illustrated the significance of VITA and the Earned Income Tax Credit (EITC) for low income families in the following way: the average income for a participating family of three is $17,000 and annual rent is $12,000 which leaves approximately $5000 for the remainder of the family’s expenses. “How do you do that without EITC?” he asked rhetorically. “This is money that is key to survival,” said Tejeda.

Kingsbridge Heights and the Children’s Aid Society are familiar with the financial strain that many Head Start families face. They conducted workshops to recruit participants for the VITA pilot. Additional information on financial literacy and immigration was provided at recruitment sessions. Both programs reported that raising interest was a challenge due to the late start in the aftermath of Superstorm Sandy. Participating staff agreed that earlier promotion of the free tax return preparation services would likely increase participation of Head Start families and community members. Lack of support staff, especially Spanish speaking staff was the second recruitment hurdle because there are large immigrant populations in these pilot site communities.

Apprehension by many of the undocumented families, some on the path to applying for citizenship, was the third and most significant recruitment obstacle. Elizabeth Perez of the Children’s Aid Society stated, “(It was) difficult just to get them to talk to me.” Kingsbridge Heights had a few people start the VITA process and leave without completing their return or providing any explanation. Christina Ventura of Kingsbridge Heights, Tejeda and other stakeholders are aware that families who are afraid or uninformed will pay another tax preparer $300 to $400 dollars. “Not having command of the language and trying to convince them could be really difficult,” said Perez.

Staff at both VITA Pilot Head Start locations noticed that numerous people had misconceptions about filing taxes, receiving public benefits, applying for citizenship and the relationship of these government programs. Kingsbridge Heights conducted financial literacy workshops during ESL classes and promoted the Head Start VITA Pilot free income tax preparation services at the end of each session. Ventura recommends that holistic programs like Kingsbridge Heights and other Head Start sites combine English language instruction and the promotion of VITA services with information about tax preparation, consumer protection, financial literacy and applying for citizenship.

Mr. Sanchez* had not initially paid attention to the Volunteer Income Tax Assistance (VITA) Pilot Program promotional flyer he received when picking up his two children from their Head Start program. Fortunately, the children’s grandmother also received the flyer and she encouraged her son to utilize the free tax return preparation services. Mr. Sanchez has been in the United States for 10 years and is interested in completing the path to citizenship. Last year he paid an auditor to complete the family’s tax return. Mr. Sanchez was told that he owed several hundred dollars. When asked if he would recommend VITA to others he replied, “Yes, because it’s hard right now economically and we can’t afford to pay to file taxes.”Chart showing the positive economic impact of Volunteer Income Tax Assistance for low-income participants.

The Sanchez family and many other Head Start families qualify for VITA and may be eligible for EITC because they have children and their income may meet specific EITC income guidelines. “Head Start families are the sweet spot… (They) hit the right zone everywhere,” said Tejeda. A 2012 study of 6,050 EITC recipients conducted by the Food Bank revealed that on average the VITA program increased income of participants to 23 percent above the Federal Poverty Level of $18,500. This is equivalent to a 54 percent increase in the actual net wages for a family of three earning approximately $16,807 in annual gross wages.

Many Head Start VITA Pilot participants planned to use the money from their income tax return to pay for rent and other bills. Others were interested in starting college savings accounts. The Children’s Aid Society is developing tools and exploring how to make Head Start children and their parents educated financial consumers. Schachter explained that the long range goal is getting Head Start children to college and a major component of the admissions process is understanding the Free Application for Federal Student Aid (FAFSA) and other financial aid materials. Mr. Sanchez plans to attend future workshops offered at his community Head Start center about investing for your children. “I want to start college funds for them so they can go wherever they want when they are older,” he exclaimed.

Ultimately, the Head Start VITA pilot project filed 60 tax returns.  Kingsbridge Heights Community Center had 42 participants and approximately $42,704 in total refunds. The Children’s Aid Society had 18 participants and also reported approximately $57,874 in total refunds. An ideal strategy to expand the footprint of services will have multiple sites with intake staff registering participants, collecting their required information and electronically submitting the documents to the Food Bank at designated times each day. Tejeda hopes to increase the number of participating Head Start sites and the volume of returns completed through the program.