Families in your community, like most in the country, work hard just to make ends meet. For many, the money that they receive after filing their taxes is the largest single infusion of cash into their family budget.
In 2017, 27 million qualified workers and families received over $65 billion in Earned Income Tax Credit (EITC) on average these families received about $2,455. For many working families these funds allow them to pay down bills, make car repairs and buy durable goods.
Over the last 45 years, Volunteer Income Tax Assistance (VITA) programs across the country have been providing free tax preparation to millions of low-income working families (those earning $54,000 or less annually). VITA tax preparers are IRS-trained and certified, which means they maximize returns with no fees and help families receive refunds to which they might not realize they’re entitled, including the EITC and Child Tax Credit (CTC).
Many states and localities have local EITCs that build off the federal credit and offer families a similar credit for their state and local taxes. In Washington, D.C., families may be able to get an added boost from their DC EITC payment if they put aside savings for a “rainy day”. Members of the D.C. City Council have introduced legislation that would allow households receiving a refund of $300 or more to elect to delay 30 percent of their DC EITC for six months. By delaying their refund, they would receive a savings match of 50 percent. These funds would be sent to tax filers through direct deposit, paper check or via a prepaid card. By spacing out the refund, the policy intends to create additional opportunities for families to build assets or pay off debt. Successful implementation would rely heavily on the city coordinating with VITA programs and volunteers across the District to educate residents on the benefits of delaying a portion of their EITC refund.
For more than 17 years, the National League of Cities Institute for Youth, Education, and Families has worked with dozens of cities to promote VITA utilization and EITC outreach and education. Combining these efforts helps low- and moderate-income residents understand that they are eligible and secure additional resources without incurring additional fees.
VITA programs throughout the country are gearing up for the upcoming tax season and looking for volunteers. City leaders are well positioned to support VITA efforts to help strengthen not only family budgets but their city’s budget too. Research from the Urban Institute suggests that the economic health of cities and communities depends on the financial health and stability of their residents.
To support local VITA efforts and bring more dollars into their residents’ pockets, city leaders should:
- Identify and reach out to current VITA sponsors to learn more about where they will be operating sites in the coming tax year. If possible, provide additional city resources to increase access to services. For example, host a VITA location at City Hall for city employees and other residents.
- Enlist more VITA volunteers by sharing opportunities with city residents and local businesses through public events, media, the city’s website and newsletters.
- Work with VITA sponsors to develop a citywide plan to expand VITA sites and increase the percentage of eligible taxpayers who claim the EITC going to VITA sites.
- Publicize the VITA program’s impact and operations such as when they will be open and where, through public events, media, the city’s website and newsletters.
- In partnership with sponsors connect VITA programming with opportunities for residents to connect to other public benefits (such as SNAP or WIC) and safe affordable financial products to deposit their refunds.
To download NLC’s Toolkit on Maximizing the Earned Income Tax Credit, click here. To find out more about who the VITA partners are in your community, click here. For more information about VITA and city-led EITC outreach campaigns, contact Patrick Hain at (202) 626-3099 or firstname.lastname@example.org.
About the authors: Patrick Hain is principal associate for Financial Empowerment in the NLC Institute for Youth, Education, and Families.