The EITC Is the Most Powerful Poverty-Fighting Tool in Our Arsenal
By now, it is likely that you are aware of the Earned Income Tax Credit (EITC). You may be aware that it is a powerful anti-poverty tool, that annually lifts millions of families and children out of poverty. You may also be aware that it can be worth up to $6,318 for a family with three or more children, and that it’s a fully refundable credit, which means that even if a taxpayer has no tax liability, they can receive all the EITC as a tax refund. You might even be aware of the PATH Act, that prohibits the IRS from disbursing any tax refunds containing the EITC until after February 15 each year. You’re also likely aware that some paid preparers offer Refund Advances to help offset the delayed disbursement of refunds.
But are you aware that nearly 20% (around 27 million) of American households claim the EITC each year? Are you aware that close to 20% of households who are eligible may not be claiming the EITC? And are you aware that many of the hard-working, average Americans that you encounter every day, maybe even you, might be eligible for the EITC and either don’t know it, or don’t claim it? Are you aware that in 2014, 39% of EITC recipients took a Refund Anticipation Check or Refund Anticipation Loan? I’m sure you’re aware that by and large, loans aren’t free, but are you aware that in addition to the cost of the Refund Anticipation loan, in most cases there is also a cost associated with tax preparation?
Today is EITC Awareness Day, and it’s a great day for a heightened level of awareness. Not only awareness of the EITC and all the great benefits that are reaped for individuals and families who claim the credit, but also a heightened awareness of the people around us. Take a moment to become more aware of the people you interact with throughout the day. Since one in five EITC-eligible taxpayers aren’t claiming the credit, if we all use our time, resources and our regular interactions today to tell at least five people about the EITC, together we may be able to reach and raise the level of awareness of the 20% of eligible taxpayers who don’t claim the credit.
While we’re raising awareness about the EITC, today is also a great day to raise awareness about local VITA programs, where IRS-certified tax preparers will not only file tax returns for EITC-eligible households at no cost, but can also connect them to other services that can contribute to their long-term financial well-being.
Now that you’ve got a heightened awareness of the EITC, potentially eligible recipients and the no cost resources available to help them claim the credit, will you join us today to raise your voice and the awareness of those around you? Our EITC Awareness Day Toolkit has tools and resources to help.