Transcript Money that Matters: Doing Tax Credit Outreach in the Workplace

MONEY THAT MATTERS
Doing Tax Credit Outreach in the Workplace
Bridging the Gap Webinar Series, March 2010
Hillary Lazar, Benefits Outreach Coordinator, NHSA
Understanding
the Basics:
Refundable
Tax Credits
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
Refundable Tax Credits:
What are they?
For example:
Taxes owed:
$400
Tax credit received:
$1000
Cash I get back with
a non-refundable credit:
Cash I get back with
a refundable credit:
$0
$600
Refundable Tax Credits:
What are they?
Non-Refundable
Tax Credit
$1,000
Income Taxes
Owed
Remaining Tax
Credit
- $400
= $600
Refundable Tax Credits:
What are they?
Refundable Tax
Credit
Income Taxes
Owed
Remaining Tax
Credit
$1,000
- $400
= $600
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
Refundable Tax Credits:
Which credits are refundable?
Two Major “Refundable” Tax Credits:
1. The Earned Income Tax Credit
2. The Additional Child Tax Credit
The Earned
Income Tax
Credit
The Earned Income Tax
Credit: What is it?
• Largest Refundable tax credit
• For low to moderate-income
working families
• For low-income individuals
The Earned Income Tax
Credit: Why is it important?
The EIC Lifts More than 5 Million Above the
Poverty Line.
2.5 Million
Adults
2.6 Million
Children
The Earned Income Tax
Credit: Why is it important?
Boosts Workers’ Income:
• $8/hour job = $10+/hour job
• $16,000 annual = $21,000+ annual
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
$48,279
$5,657
2 children
$40,295
$45,295
$5,028
1 child
$35,463
$40,463
$3,043
No children
$13,440
$18,440
$457

Income limits for married workers are $5,000 higher than these amounts.

Investment income cannot exceed $3,100.
The Earned Income Tax Credit:
How much is it worth?
M
Maximum Benefit
$5,657
6,000
Maximum Benefit $5,028
Credit Amount ($)
5,000
4,000
Maximum Benefit $3, 043
3,000
2,000
1,000
Maximum Benefit $457
0
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Income ($)
No Children
1 Child
2 Children
3 or More Children
Married Filing Jointly
The Earned Income Tax
Credit: Other Criteria
 Each child claimed must count as a
“qualifying child”
 Immigrant applicants must be legally
authorized to work
The Earned Income Tax
Credit: Other Information
Other Information
EIC Does Not Count as Income
State Rules Control
SNAP (food stamps)
TANF (cash assistance)
Medicaid
Child Care subsidy
Public Housing
Energy Assistance
Head Start
CHIP (no state counts)
SSI
Veteran’s Benefits
The Additional
Child Tax Credit
(and other credits for
working families)
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
The Child Tax Credit:
How much is it worth?
$1000 for every “qualifying child”
For families with annual income under:
• $110,000 for married couples
• $75,000 for single or head of household
• $55,000 married filing separately
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
The Additional Child Tax
Credit: Other Information
 Must have more than $3000 in taxable income

What it is worth:
Amount of credit leftover from the CTC
OR
15% of taxable income after $3,000
The (Additional) Child Tax
Credit: Other information
CTC Does Not Count as Income
Federal Programs
State-run Programs
SNAP (food stamps)
TANF
Medicaid
Child Care subsidy
Public Housing
Energy Assistance
Head Start
CHIP
SSI
Veteran’s Benefits
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
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
Child and Dependent
Care Credit
• 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
Claiming
the Credits
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.
Claiming the Credits:
Means Filing Taxes!
 A copy of 2008 tax return
 W-2 forms from all jobs. If you don’t 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
Claiming the Credits: Avoid
Commercial Tax Preparers
30%
Self-Prepare
or Use Free
Filing
Programs
70% Use
Commercial
Tax Preparers
EITC Claimants
 Average fees range from $85 - $120 for e-filing.
Claiming the Credits: Avoid
Refund Anticipation Loans
No guarantee refund will equal the loan
amount.
• High-interest loans – can be over 180 percent
• Processing fee – can be $80 or more
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
Claiming the Credits:
From Credit To Savings
• Use Direct Deposit and Split refund to start
saving money
Outreach info and materials: www.splitrefund.net
• File a W-5 for the advance EITC
Tax Credit
Outreach in
the
Workplace
Workplace Outreach:
Why Bother?
EIC Eligible Workers
75 – 80% Claim EIC
20 - 25% Do Not
Claim EIC
= $8 billion
Workplace Outreach:
Why Bother?
Minimum Wage Worker With One Child
Total Credits
( MWPC,
EITC and
CTC)
$20,000
$18,000
$16,000
$4,443
33% increase
Annual
wages after
payroll taxes
$14,000
$12,000
$10,000
$3,503
$8,000
$6,000
$13,391
$4,000
$6,695
$2,000
$0
Full-time- 40 hours
Part-time- 20 hours
52% increase
Workplace Outreach: You
Don’t 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
Workplace Outreach:
First Steps
Self-Assessment:
What outreach works best for your
organization?
•
•
•
•
Communication methods
Existing programs
What worked in the past
Special Considerations
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
Workplace Outreach: How
to Talk About Tax Credits
Talking points to emphasize:
 It’s for working families
 They earned it – they should get it!
 The financial crisis
 It’s a simple process
Use Language That’s Empowering.
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
LEARN MORE!
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
[email protected]
POLL QUESTION:
How much do you know about the Earned
Income Tax Credit?





A lot
Some
A little
Nothing
Unsure
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
Don’t know
POLL QUESTION 6:
True or False: Children in immigrant families do
not qualify for the Child Tax Credit.
 True
 False
 Unsure
POLL QUESTION:
How much do you know about the Child Tax
Credit?





A lot
Some
A little
Nothing
Unsure
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
POLL QUESTION:
Do you any concerns about doing outreach?
 Not enough time – I’m busy enough as is
 Money is a sensitive/private topic
 Outreach means adding to the organization’s
budget
 I’ve done outreach – nothing works
 All of the above
 I don’t have concerns
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 .
POLL QUESTION:
Have you heard of VITA sites?
 Yes
 No
 Unsure
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
POLL QUESTION:
Will you try at least one outreach technique this
tax season?
 Yes
 No
 Maybe