1. Bridging the Gap Webinar Series, March 2010 Hillary Lazar, Benefits Outreach Coordinator, NHSA MONEY THAT MATTERS Doing Tax Credit Outreach in the Workplace

2. Understanding the Basics: Refundable Tax Credits

3. Refundable Tax Credits: What are they? Non-refundable Taxes: Reduces or eliminates taxes owed No money back Refundable Taxes: Reduces or eliminates taxes owed Leftover money back in cash refund

4. Refundable Tax Credits: What are they? Tax credit received: Taxes owed: Cash I get back with a non-refundable credit: Cash I get back with a refundable credit: $400 $1000 $0 $600 For example:

5. Refundable Tax Credits: What are they? Income Taxes Owed Remaining Tax Credit - $400 $1,000 = $600 Non-Refundable Tax Credit

6. Refundable Tax Credits: What are they? Refundable Tax Credit Income Taxes Owed Remaining Tax Credit - $400 $1,000 = $600

7. Refundable Tax Credits: What are they important? Three Reasons for Refundable Credits: 1. Offset income and payroll taxes 2. Supplement wages 3. Provide a work incentive

8. Refundable Tax Credits: Which credits are refundable? Two Major Refundable Tax Credits: 1. The Earned Income Tax Credit 2. The Additional Child Tax Credit

9. The Earned Income Tax Credit

10. The Earned Income Tax Credit: What is it? Largest Refundable tax credit For low to moderate-income working families For low-income individuals

11. The Earned Income Tax Credit: Why is it important? The EIC Lifts More than 5 Million Above the Poverty Line.

12. The Earned Income Tax Credit: Why is it important? Boosts Workers Income: $8/hour job $16,000 annual = $10+/hour job = $21,000+ annual

13. The Earned Income Tax Credit: How much is it worth? For 2008: Number of children: Income less than: EIC up to: 3 or more children$43,279$5,657 2 children$40,295$5,028 1 child$35,463$3,043 No children$13,440$457 Income limits for married workers are $5,000 higher than these amounts. Investment income cannot exceed $3,100. $48,279 $45,295 $40,463 $18,440

14. The Earned Income Tax Credit: How much is it worth?

15. The Earned Income Tax Credit: Other Criteria Each child claimed must count as a qualifying child Immigrant applicants must be legally authorized to work

16. The Earned Income Tax Credit: Other Information Other Information EIC Does Not Count as IncomeState Rules Control SNAP (food stamps)TANF (cash assistance) MedicaidChild Care subsidy Public HousingEnergy Assistance Head StartCHIP (no state counts) SSI Veterans Benefits

17. The Additional Child Tax Credit (and other credits for working families)

18. The Additional and Child Tax Credits: What are they? CTC: Non-refundable tax credit ACTC: Refundable tax credit For low and moderate-income families For families with children

19. The Child Tax Credit: How much is it worth? For families with annual income under: $110,000 for married couples $75,000 for single or head of household $55,000 married filing separately $1000 for every qualifying child

20. The Child Tax Credit: Other Criteria Filers must have children Each child claimed must count as a qualifying child Immigrant applicants and children must have a valid ITIN

21. The Additional Child Tax Credit: Other Information What it is worth: Amount of credit leftover from the CTC OR 15% of taxable income after $3,000 Must have more than $3000 in taxable income

22. The (Additional) Child Tax Credit: Other information CTC Does Not Count as Income Federal ProgramsState-run Programs SNAP (food stamps)TANF MedicaidChild Care subsidy Public HousingEnergy Assistance Head StartCHIP SSI Veterans Benefits

23. The American Opportunity Tax Credit (formerly HOPE) Helps pay for college tuition and education-related expenses Worth up to $2,500 Partially refundable Up to $1,000 can be claimed even if no income tax is owed

24. The Making Work Pay Credit Bonus for workers in 2009 (ARRA) Most receive credit automatically in paycheck Up to $400 for most ($800 for married couples filing jointly) Income limits are $75,000 (single) and $150,000

25. Helps cover child care or caregiver expenses Maximum expenses that can be claimed: – $3,000 for one dependent, $6,000 for two or more Credit amount = 20 - 35% of expenses – depending on income In 12 states the credit is refundable Child and Dependent Care Credit

26. Claiming the Credits

27. Claiming the Credits: Means Filing Taxes! Employees must file a tax return! – Form 1040 or Form 1040A – not 1040EZ – EIC - Schedule EIC – CTC - Form 8812 – For CDCC – Form 2441 – For AOTC – Form 8863 – For MWPC – Schedule M Workers not raising children can file any form Eligible workers can claim EIC and CTC refunds for up to 3 previous years.

28. Claiming the Credits: Means Filing Taxes! A copy of 2008 tax return W-2 forms from all jobs. If you dont have the W-2, bring final pay stubs, if available 1099 forms for any other income Any IRS notices received during 2009 Proof of other income and expenses Social Security Numbers for worker, spouse and any children born before 12/31/09 – for the EITC Individual Taxpayer Identification Numbers (ITINs) documentation – for the CTC

29. Claiming the Credits: Avoid Commercial Tax Preparers EITC Claimants Average fees range from $85 - $120 for e-filing.

30. Claiming the Credits: Avoid Refund Anticipation Loans High-interest loans – can be over 180 percent Processing fee – can be $80 or more No guarantee refund will equal the loan amount.

31. Claiming the Credits: Free Tax Preparation services Volunteer Income Tax Assistance (VITA) - Free preparation for low-income workers - Sites across the country - Volunteers trained under IRS guidance - Taxpayers can receive refund in 7-12 days through e-filing Online Calculators

32. Claiming the Credits: From Credit To Savings Use Direct Deposit and Split refund to start saving money Outreach info and materials: www.splitrefund.netwww.splitrefund.net File a W-5 for the advance EITC

33. Tax Credit Outreach in the Workplace

34. Workplace Outreach: Why Bother? 75 – 80% Claim EIC 20 - 25% Do Not Claim EIC EIC Eligible Workers = $8 billion

35. Workplace Outreach: Why Bother?

36. Workplace Outreach: You Dont Have to be an Expert You do NOT have to be a tax expert to help families claim their credits. You have two jobs: 1.Raise Awareness 2. Connect them with the Experts and Enrollment Specialists

37. Workplace Outreach: First Steps What outreach works best for your organization? Communication methods Existing programs What worked in the past Special Considerations Self-Assessment:

38. Workplace Outreach: Raise Awareness Include fliers with paychecks/stubs or when distributing W-2s Put up posters in the break room or bathrooms Talk about credits during staff meetings Offer to do one-on-one conversations about taxes and/or finances Bring in a VITA volunteer counselor for an information or enrollment session

39. Workplace Outreach: How to Talk About Tax Credits Talking points to emphasize: Its for working families They earned it – they should get it! The financial crisis Its a simple process Use Language Thats Empowering.

40. Workplace Outreach: Use Existing Resources Contact a VITA Site: 1-800- 906-9887 Download EITC toolkits and resources Access information online http://www.nationalassembly.org/FSPC/BridgingThe Gap/EarnedBenefits.aspx http://www.irs.gov/app/understandingTaxes/student/t ax_tutorials.jsp

41. For more information about tax credit outreach or the Bridging the Gap Initiative please contact: Hillary Lazar, Benefits Outreach Coordinator – NHSA 202-347-2080 x10 Ph 202-393-4517 Fax hlazar@nassembly.org LEARN MORE!

43. POLL QUESTION: How much do you know about the Earned Income Tax Credit? A lot Some A little Nothing Unsure

44. POLL QUESTION: How much can the Earned Income Tax Credit be in cash back? More than $5000 Up to $5000 Up to $2500 Up to $1500 Dont know

45. POLL QUESTION 6: True or False: Children in immigrant families do not qualify for the Child Tax Credit. True False Unsure

46. POLL QUESTION: How much do you know about the Child Tax Credit? A lot Some A little Nothing Unsure

47. POLL QUESTION: Which of the following tax credits have you heard of? The American Opportunity Tax Credit The HOPE Credit The Child and Dependent Care Credit The Making Work Pay Credit

48. POLL QUESTION: Do you any concerns about doing outreach? Not enough time – Im busy enough as is Money is a sensitive/private topic Outreach means adding to the organizations budget Ive done outreach – nothing works All of the above I dont have concerns

49. POLL QUESTION: Why is tax credit outreach important? In other words, what brings you here today? Want to offer more financial support to our workers Not enough working families know about them Times are tough for everyone, every penny helps All of the above Not exactly sure (ie. my boss asked me to sign up...)

50. POLL QUESTION: Have you heard of VITA sites? Yes No Unsure

51. Pop Quiz! 1.Which of the following statements are true? The Earned Income Tax Credit and Additional Child Tax Credit are two of the major refundable credits out there. T The Earned Income Tax Credit can be as much as $5657. T A qualifying child for the Child Tax Credit is under 19 years old. F The American Opportunity Tax Credit helps to cover college tuition and education expenses. T VITA sites charge a small processing fee for tax prep. F

52. POLL QUESTION: Will you try at least one outreach technique this tax season? Yes No Maybe