Catholic Charities USA Webinar: The Earned Income Tax Credit Information and Outreach Catholic Charities USA Webinar: The Earned Income Tax Credit Information and Outreach

Presenters 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

Agenda 1.What is the Campaign to Reduce Poverty? Monica Maggiano 2.Introduction of EITC and SpeakersJane Stenson 3.Money Talks! Have you heard? John Wancheck Claim the Earned Income Credit 4.Questions and Answers 5.IRSAmelia Dalton 6.EITC outreach Claudie Burchfield 7.Questions and Answers 1.What is the Campaign to Reduce Poverty? Monica Maggiano 2.Introduction of EITC and SpeakersJane Stenson 3.Money Talks! Have you heard? John Wancheck Claim the Earned Income Credit 4.Questions and Answers 5.IRSAmelia Dalton 6.EITC outreach Claudie Burchfield 7.Questions and Answers

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!Endorse 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!Endorse the Campaign

Main 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 heard? Claim the Earned Income Credit Money Talks! Have you heard? Claim the Earned Income Credit Presentation by: John Wancheck Organization: Center on Budget and Policy Priorities Outreach Kit! Phone: (202)

The Earned Income Credit (EIC)… Represents up to a 40% pay increase for some workers Represents up to a 40% pay increase for some workers Can turn an $8 per hour job into a $10 per Can turn an $8 per hour job into a $10 per hour job In 2005, raised 4.1 million individuals — including 2.2 million children — above the poverty line In 2005, raised 4.1 million individuals — including 2.2 million children — above the poverty line

The 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 EICWith EIC Annual Income Estimated Poverty Line for Family of Two (including one child) $14, % 89%

How Do Workers Benefit? Single parent, 2 children, earns $14,000 Her EIC = $4,716 Single parent, 2 children, earns $14,000 Her EIC = $4,716 Single parent, 2 children, earns $18,000 Her EIC = $4,166 Single parent, 2 children, earns $18,000 Her EIC = $4,166 Married workers, 2 children, earn $25,000 Their EIC = $3,113 Married workers, 2 children, earn $25,000 Their 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 Credit Amount The Federal Earned Income Credit in Tax Year 2007 Maximum 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 childrenOne child Maximum benefit $428 $40,000

EIC Benefits for Tax Year 2007 at Various Income Levels EIC Benefits for Tax Year 2007 at Various Income Levels 2007 household income EIC for single workers not raising a child EIC for single workers raising one child EIC for single workers raising two or more children $ 5,000 $384$1,709$2,010 $ 8,000 $349$2,729$3,210 $10,000$196$2,853$4,010 $12,000$43$2,853$4,716 $14,000$0$2,853$4,716 $16,000$0$2,751$4,582 $20,000$0$2,112$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 Qualify for the EIC?  The average refund amount for families is $2,280.  Income limits for married workers who file their taxes jointly are $2,000 higher than these amounts.  Investment income cannot exceed $2,900. Number of children: Income less than: EIC up to: 1 child $33,241$2,853 2 or more children $37,783$4,716 No children $12,590$428 For tax year 2007:

Definition of a “Qualifying Child” EIC Relations hip Son, daughter Stepchild, adopted child, grandchild Brother, sister, stepbrother, stepsister (or their descendents) Foster child placed by a government or private agency Residenc e Must live with worker in the U.S. for more than half the year Age Under 19, or under 24 if full-time student, or any age if totally and permanently disabled

Why is outreach needed? 1. As many as 15-20% of eligible workers don't claim the EIC 2. 70% of workers who claim the EIC pay commercial fees to file returns — can amount to over $300 or more in fees, draining about $1.4 billion out of EIC refunds nationwide Includes the “unbanked” Includes the “unbanked”

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-employed Parents just entering the labor force; self-employed New parents — incl. foster and adoptive, kinship care New parents — incl. foster and adoptive, kinship care Divorced or separated parents Divorced or separated parents Homeless workers; dislocated workers Homeless workers; dislocated workers Workers not raising qualifying children Workers 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 return Workers not otherwise required to file a tax return For Tax Year 2007: For Tax Year 2007: $8,750 - single $11,250 – head of household $17,500 - married

Volunteer Income Tax Assistance (VITA)  Provides free tax filing help for low- income workers at community sites. o Sponsored by the IRS o In many communities across the country o Refunds deposited in 7-12 days through e-filing Sites can help open bank accounts Sites can help open bank accounts Alternative to costly commercial tax preparation fees and Refund Anticipation Loans (RALs) Alternative to costly commercial tax preparation fees and Refund Anticipation Loans (RALs)

EIC Outreach Coalitions Choose strategy, themes and materials for tax season outreach campaigns Choose strategy, themes and materials for tax season outreach campaigns Find partners to host Volunteer Income Tax Assistance (VITA) sites Find partners to host Volunteer Income Tax Assistance (VITA) sites Recruit VITA volunteers as preparers Recruit VITA volunteers as preparers Organize training for volunteers Organize training for volunteers Get information out to workers! Get information out to workers!

The Value of More Partners Outreach coalitions divide campaign tasks; takes advantage of partners’ special capabilities and avoids duplication Outreach coalitions divide campaign tasks; takes advantage of partners’ special capabilities and avoids duplication Some partners are experienced reaching some parts of the community: Some partners are experienced reaching some parts of the community: Ex. -- ethnic communities and businesses, family day care providers, people with disabilities

Making Connections Finding an Outreach Coalition Finding an Outreach Coalition Coalitions will have lists of VITA sites, flyers, etc. Coalitions will have lists of VITA sites, flyers, etc. Finding VITA sites for referral Finding VITA sites for referral Individuals: Call IRS (voic option #1, then #5, gets you to an operator who has sites by zipcode). Individuals: Call IRS (voic option #1, then #5, gets you to an operator who has sites by zipcode). Groups: call the IRS Territory Manager for a list Groups: call the IRS Territory Manager for a list

EIC Impact in the Community Caddo Parish, LA 32% of all tax filers claimed EIC for 2004, bringing in nearly $74 million, plus over $17 million through the Child Tax Credit 32% of all tax filers claimed EIC for 2004, bringing in nearly $74 million, plus over $17 million through the Child Tax Credit If 20% of those eligible didn’t claim the EIC, nearly $10 million from the EIC may have been left in Washington instead of benefiting Caddo Parish. If 20% of those eligible didn’t claim the EIC, nearly $10 million from the EIC may have been left in Washington instead of benefiting Caddo Parish. Tax Preparation Fees and Loans 78% of Caddo Parish EIC filers used commercial preparers – higher than national rate. 78% of Caddo Parish EIC filers used commercial 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 Data Brookings Institution interactive website Homepage.aspx Brookings Institution interactive website Homepage.aspx Zip Code-level data Zip Code-level data Statistics on EITC, CTC, RALs, income levels of filers…..& much more….. Statistics on EITC, CTC, RALs, income levels of filers…..& much more…..

Do the EIC/CTC Affect Other Public Benefits? EIC: not income for specified federal programs including: EIC: not income for specified federal programs including: Food stampsMedicaid Food stampsMedicaid SSIVeteran’s benefits SSIVeteran’s benefits Public housingHead Start Public housingHead Start States generally don’t count EIC for TANF or SCHIP. Some count it for child care and energy assistance. CTC: CTC: Not income for any federal, state or local program financed even in part with federal funds

Resource rules Programs have different rules about how long the EIC or CTC refund can be saved before it counts against program resource limits. Programs have different rules about how long the EIC or CTC refund can be saved before it counts against program resource limits. All programs exclude EIC/CTC as a resource for at least one month after the month the refund is received. All programs exclude EIC/CTC as a resource for at least one month after the month the refund is received. Food stamps – not counted for 12 months Food 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 Every Paycheck Some workers raising children can get the Advance EIC in their paycheck and get a year- end refund too! Some workers raising children can get the Advance EIC in their paycheck and get a year- end refund too! Increase take-home pay up to $130 p/month. Increase take-home pay up to $130 p/month. Workers must file IRS Form W-5 with their employer to start Advance EIC payments. Workers must file IRS Form W-5 with their employer to start Advance EIC payments.

Additional Tax Credits Child Tax Credit (CTC) The CTC is worth up to $1,000 for each qualifying child under age 17 The CTC is worth up to $1,000 for each qualifying child under age 17 Workers who earned more than $11,750 in 2007 can get a CTC refund Workers who earned more than $11,750 in 2007 can get a CTC refund Child and Dependent Care Credit (DCTC) Federal tax credit for expenses to care for a young child, or a dependent with disabilities, in order to work. Credit only reduces income tax. Federal tax credit for expenses to care for a young child, or a dependent with disabilities, in order to 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? Single parent, 2 children, earns $14,000 Her EIC $4,716 + CTC $338 = 5,054 Single parent, 2 children, earns $14,000 Her EIC $4,716 + CTC $338 = 5,054 Single parent, 2 children, earns $18,000 Her EIC = $4,166 + CTC $938 = 5,104 Single parent, 2 children, earns $18,000 Her EIC = $4,166 + CTC $938 = 5,104 Married workers, 2 children, earn $25,000 Their EIC = $3,113 + CTC $2,000 = $5,113 Married workers, 2 children, earn $25,000 Their EIC = $3,113 + CTC $2,000 = $5,113

IRS- EITC Amelia Dalton Senior Tax Analyst, Internal Revenue Service Amelia Dalton Senior Tax Analyst, Internal Revenue Service

Spotlight on an Agency Link between Financial Literacy and EITC Claudie Burchfield Director of the Office of Economic Opportunity in Murphy, North Carolina Link between Financial Literacy and EITC Claudie Burchfield Director of the Office of Economic Opportunity in Murphy, North Carolina

Questions and Answers

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