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
Email: [email protected]
What are the Earned Income Credit
(EIC) and the Child Tax Credit (CTC)?
Federal tax benefits for low-income working families and individuals
Offset income and payroll taxes
Provide a work incentive
Reduces taxes workers may owe
Even if workers don’t owe taxes, they may be eligible
Some families can claim both credits
Tax Credits: Reduce Poverty
The EIC & CTC Lift More than 9 Million
Above the Poverty Line
Tax Credits: Making a Difference
Why Conduct Tax
Why is Outreach Needed?
EIC Eligible Workers
80% Claim EIC
20% Do Not
Why is Outreach Needed?
Over $10 billion in EIC refunds may
have gone unclaimed in 2010
Efforts are needed to ensure eligible workers
know how to claim the EIC and other tax credits.
How Much Can Workers Earn and
Still Qualify for the EIC?
For Tax Year 2012:
Income less than: EIC up to:
3 or more children
Income limits for married workers are $5,210 higher than these
Workers not raising children must be between the ages of 25
Investment income cannot exceed $3,200.
The Federal EIC in Tax Year 2012
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:
Single or Head of
Married filing separately
The CTC is worth up to $1,000 for each qualifying child.
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
Immigrant workers with Individual Taxpayer Identification
Some non-custodial parents
Definition of a “Qualifying Child”
Son, daughter, grandchild, stepchild, adopted child, brother,
sister, stepbrother, stepsister (or their descendents) or
foster child placed by a government or private agency
Must live with worker in the U.S. for more than half the
Under 19 or 24 if full-time
student or any age if totally
and permanently disabled
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.
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
How do Workers Use
the Tax Credits?
Workers Use the Credits to…
Rent & Utilities
The credits help workers keep working and
care for themselves and their children.
How do the Credits
What Counts as Earned Income?
Wages, salaries, and tips
Net earnings from selfemployment
Union strike benefits
Military combat pay
Non-taxable earned income
Payroll deductions for dependent
care or retirement plans
Social security, SSI, welfare
Other income, such as:
Alimony and child support
Interest on bank accounts
Maxine is a single mom raising a 6-year old son.
She earns $19,000 this
$270 in income tax has
How much is Maxine’s total refund?
Maxine’s Tax Refund
+ $ 1,000
Total Tax Benefit
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
Filing for Free
The High Cost of Commercial
When it’s time to file a tax return, many workers seek
help from a commercial tax preparer.
Average fees range from $85 - $120 for e-filing.
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
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”)
How Can You Conduct
Tax Credit Outreach
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.
Notify Workers in the Community
Alert workers about the EIC and CTC and provide the
basic information they need:
Print messages about the tax credits and free tax filing
How to find tax forms
VITA site locations
Help getting an SSN or ITIN
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
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
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
Collaborate with Community Groups
Inform partner agencies about the EIC and CTC
Partner with organizations that provide other resources
Public benefits, housing assistance and family counseling
Coordinate a free tax help day or tax credit awareness
Invite partners to share tax credit messages on social
Sample messages for FaceBook & Twitter
Connect with a Tax Credit
There may be one in your area!
The National EITC Partnership website:
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
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
Searchable Outreach Strategies Database
Sample Press Release
EIC & CTC FAQs and much more!
Use the Brookings Institution EITC
Website to Localize Your Efforts
All filers OR all EITC filers
Zip Code-level data
Search by counties, municipalities, districts, etc.
Tax Year 2010 on website now
What is the first thing you will do
to promote the EIC, CTC and free
tax filing assistance?
Distribute information to workers (flyers, envelope stuffers,
post cards or newsletters)
Share resources with partners at a meeting or electronically
Post outreach info online through social media platforms
Volunteer at a VITA site and encourage others to do the same
Partner to coordinate a free tax help day or awareness event
I do not plan to promote the EIC, CTC and free tax filing
assistance at this time