1 promote the earned income credit and child tax credit date: tuesday, february 26, 2013...
TRANSCRIPT
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Promote the Earned Income Credit
And Child Tax Credit
Date: Tuesday, February 26, 2013
Presentation by: Roxy Caines
Organization: Center on Budget and
Policy Priorities
Phone: 202-408-1080
Email: [email protected]
Web: www.eitcoutreach.org
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What are the Earned Income Credit (EIC) and the Child Tax Credit (CTC)?
Federal tax benefits for low-income working families and individuals
Purpose: Offset income and payroll taxes
Supplement wages
Provide a work incentive
Key Features: Reduces taxes workers may owe
Even if workers don’t owe taxes, they may be eligible
Some families can claim both credits
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Tax Credits: Reduce PovertyThe EIC & CTC Lift More than 9 Million
Above the Poverty Line
2011
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Tax Credits: Making a Difference
Why Conduct Tax Credit Outreach
Activities?
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Why is Outreach Needed?
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80% Claim EIC 20% Do Not Claim EIC
EIC Eligible Workers
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Why is Outreach Needed?
Over $10 billion in EIC refunds mayhave gone unclaimed in 2010
Efforts are needed to ensure eligible workers
know how to claim the EIC and other tax credits.
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How Much Can Workers Earn and Still Qualify for the EIC?
Income limits for married workers are $5,210 higher than these amounts.
Workers not raising children must be between the ages of 25 and 64.
Investment income cannot exceed $3,200.
Number of children:
Income less than: EIC up to:
3 or more children $45,060 $5,891
2 children $41,952 $5,236
1 child $36,920 $3,169
No children $13,980 $475
For Tax Year 2012:
The Federal EIC in Tax Year 2012
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How Much Can Workers Earn and Qualify for the CTC?
Workers who earned more than $3,000 in 2012 can get a CTC refund.
Income less than: Filing status:
$110,000 Married
$75,000 Single or Head of Household
$55,000 Married filing separately
The CTC is worth up to $1,000 for each qualifying child.
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Who Qualifies for the EIC and CTC?
Workers who are: Working full-time, part-time or self-employed Also receiving public benefits Single or married Raising a “qualifying child”
Some very low-income workers without a “qualifying child” may be able to claim the EIC
Immigrants legally authorized to work
CTC ONLY: Immigrant workers with Individual Taxpayer Identification
Numbers (ITINs) Some non-custodial parents
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Definition of a “Qualifying Child”
If you are a qualifying child, you cannot claim the EIC yourself.
If a child is claimed for both the EIC and CTC, the same worker must claim both credits.
EIC CTC
Relationship
Son, daughter, grandchild, stepchild, adopted child, brother, sister, stepbrother, stepsister (or their descendents) or foster child placed by a government or private agency
Residence Must live with worker in the U.S. for more than half the year
Age Under 19 or 24 if full-time student or any age if totally and permanently disabled
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Do the EIC & CTC Count as Income for Other Public Benefits?
No federal tax refund counts as income for any program with federal funding
Refunds that are saved do not count against resource limits for 12 months after the refund is received
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How do Workers Use the Tax Credits?
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Medical Expenses
TransportationRent & Utilities
Basic Needs
Child Care
Auto Repairs
The credits help workers keep working and care for themselves and their children.
Workers Use the Credits to…
How do the Credits Work?
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What Counts as Earned Income?
Includes:
Wages, salaries, and tips
Net earnings from self-employment
Union strike benefits
Employer-paid disability benefits
Military combat pay
Doesn’t Include:
Non-taxable earned income Payroll deductions for dependent
care or retirement plans
Public benefits Social security, SSI, welfare
Other income, such as: Unemployment Alimony and child support Interest on bank accounts Investment income
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Meet Maxine
She earns $19,000 this year.
$270 in income tax has been withheld.
Maxine is a single mom raising a 6-year old son.
Question:
How much is Maxine’s total refund?
A. Less than $1,000
B. $2,000 - $3,000
C. $3,000 - $4,000
D.$5,000 or more
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Maxine’s Tax Refund
EIC $ 2,864
CTC + $ 1,000
Total Tax Benefit $ 3,864
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How Do You Claim the Credits?
You must file a tax return! Form 1040 or Form 1040A – not 1040EZ EIC - Schedule EIC CTC - Schedule 8812
Workers not raising children can file any form
Eligible workers can claim EIC and CTC refunds for up to 3 previous years
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Filing for Free
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Average fees range from $85 - $120 for e-filing.
EIC Claimants
When it’s time to file a tax return, many workers seek help from a commercial tax preparer.
The High Cost of Commercial Tax Preparation
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What are RALs & RACs?Refund Anticipation Loans (RALs)
Very high-interest loans Interest rate can be > 180 percent; processing fee can
be $80 or more No guarantee refund will equal the loan
amount
Refund Anticipation Checks (RACs) Replacing usage of RALs
Temporary bank account established to receive refund and issue as a check
No faster than direct deposit
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Are There Alternatives to RALs and Commercial Tax Preparation?Volunteer Income Tax Assistance (VITA)
Free tax filing help for low-income workers at community sites. IRS Toll-free Locator: 1-800-906-9887
In many communities across the country
Volunteers are trained under IRS guidance
Taxpayers can receive refund in 7-12 days through e-filing
VITA and TCE sites are listed at www.irs.gov (key word search “VITA sites”)
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How Can You Conduct Tax Credit Outreach
Activities?
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NAACP Units & State Conferences Can Help Promote the Tax Credits
You do NOT have to be a tax expert to help families claim their credits.
Incorporate outreach activities into your routine work – and encourage your partners to do the same.
Build partnerships to expand your outreach efforts.
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Notify Workers in the Community
Alert workers about the EIC and CTC and provide the basic information they need:
Eligibility guidelines How to find tax forms VITA site locations Help getting an SSN or ITIN
Print messages about the tax credits and free tax filing assistance
Newsletters Outreach materials
Provide referrals to existing free tax preparation sites
Inform & Engage Your Network
Feature the tax credits as the topic at your next meeting or training session
Use technology Add a button/ badge and link to your website Include the tax credits in your electronic signature and invite
others to do the same. Examples: Help working families get all the money they earned!
The Earned Income Credit is a tax benefit for people who work. Tell workers how to claim it and other valuable tax credits that may provide a financial boost.
Do you know about tax benefits for people who work?
Share resources that partners can pass on to others Tax Credit Outreach Website Quick Guide to Popular Online Resources Outreach materials: posters, flyers, envelope stuffers
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Collaborate with Community Groups
Inform partner agencies about the EIC and CTC
Partner with organizations that provide other resources and services
Public benefits, housing assistance and family counseling programs
Coordinate a free tax help day or tax credit awareness event
Invite partners to share tax credit messages on social
media platforms Sample messages for FaceBook & Twitter
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Connect with a Tax Credit Outreach Coalition
There may be one in your area!
The National EITC Partnership website:www.cbpp.org/eitc-partnership
Directory of local partnerships by state Spreadsheet with coalition members and the chairperson to contact
Goals and activities of the coalition
IRS Territory Manger contact
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The Center on Budget and Policy Priorities’ National Tax Credit Outreach Campaign Can:
Deliver technical assistance and support
Present more in-depth training about the tax credits and conducting local outreach activities
Connect you to online resources:
Tax Credit Outreach Kit
EIC/CTC flyers in 21 languages
Envelope Stuffers
Color Posters
EIC Estimator
Searchable Outreach Strategies Database
Sample Press Release
EIC & CTC FAQs and much more!
www.eitcoutreach.org
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Use the Brookings Institution EITC Website to Localize Your Efforts
www.brookings.edu/projects/EITC.aspx
All filers OR all EITC filers
Zip Code-level data
Search by counties, municipalities, districts, etc.
Multiple variables
Tax Year 2010 on website now
Question:What is the first thing you will do to promote the EIC, CTC and free tax filing assistance?
A. Distribute information to workers (flyers, envelope stuffers, post cards or newsletters)
B. Share resources with partners at a meeting or electronically
C. Post outreach info online through social media platforms
D. Volunteer at a VITA site and encourage others to do the same
E. Partner to coordinate a free tax help day or awareness event
F. I do not plan to promote the EIC, CTC and free tax filing assistance at this time
G. Other35
Q&A
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