Tax season can be a stressful time for many, but for families of modest means, it can also mean a significant boost to income. That’s because of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), two critical refunds available to low- and moderate-income working families. Taken together, the EITC and CTC have proven themselves to be among the most important and effective anti-poverty programs in U.S. history, lifting an estimated 9.4 million people above the poverty line – including 5 million children. According to the Center on Budget Policy and Priorities (CBPP), these programs have made 22 million other Americans less poor, more than any other federal program besides Social Security.
Recognizing the powerful role tax time can play in boosting a family’s financial stability, the U.S. Internal Revenue Service (IRS) launched the Volunteer Income Tax Assistance (VITA) program in 1971. Since then, the program has helped millions of hard-working, low-income taxpayers maximize their tax returns and incomes. In fact, the 2015 book It’s Not Like I’m Poor, by Sarah Halpern-Meekin et al., found that the average tax refund for eligible families – counting EITC, other credits and any excess withholding – was $4,686, equivalent to about 20 percent of their annual earned income.
Here in Silicon Valley, SVCF’s economic security grantmaking strategy has provided support to organizations in San Mateo, San Francisco and Santa Clara counties offering free tax preparation to working families, often in multiple languages.
Information about the locations, dates and times that VITA sites are open across the region is available through 211 systems, both online and by phone. San Francisco and San Mateo county listings can be found at http://211bayarea.org. Find Santa Clara County listings at http://www.211scc.org.
In addition to providing support for tax sites run by Tax-Aid, Single Stop and United Way of the Bay Area across the region, SVCF is also funding United Ways of California for the development of a new online platform that will help families find the most convenient tax site near their home or work. The website will feature the locations, hours of operation, language capacities and types of services offered at each free tax preparation site across the state. Individuals will be able to sign up for appointments at selected sites, helping sites gauge demand, with a goal of reducing wait times and ensuring more families are able to receive these critical services.
The Volunteer Income Tax Assistance program also serves as a way to get clients in the door to nonprofits that offer additional services for low-income clients, such as food pantries, emergency financial assistance and free clothing. Other services that are frequently available are benefits screenings for the CalFresh and Medi-Cal programs, job training and job-seeking assistance, connection to responsible financial products and services or financial education, and much more. These services go far beyond the immediate tax filing assistance, helping families address the rapidly rising costs of living in the San Francisco Bay Area.
CBPP studies have also shown that working-family tax credits like the EITC incentivize work. In fact, the “EITC expansions of the 1990s contributed… to the subsequent increases in work among single mothers and female heads of households… [and] by boosting the employment and earnings of working-age women, the EITC also boosts the size of the Social Security retirement benefits they ultimately will receive,”according to CBPP. So the benefits of the EITC can literally last a lifetime.
This year, California Governor Jerry Brown included the first-ever California EITC in his budget, which means that the state’s poorest families – those earning under $14,000 per year – are eligible for an additional credit of up to $2,653 on their state income tax returns. To claim the credit, it is essential that taxpayers know about it in the first place. Free Volunteer Income Tax Assistance tax preparation sites – including IRS sites, Tax-Aid sites, SingleStop sites, AARP sites and others –are staffed with trained volunteers who ensure that clients will take advantage of the new statewide credit in addition to the federal EITC and the CTC.
For Silicon Valley families, these services can mean the difference between feeling the economic strain of living our region and feeling financially secure and in control. With less than one month until tax day, it is essential that eligible families know about and take advantage of the VITA service.