Earned Income Tax Credit

Jerilyn Stowe from the Community Action Partnership of Utah explains how to take advantage of the Earned Income Tax Credit.

The Earn It. Keep It. Save It. Campaign is a statewide public-private partnership working to strengthen family financial stability through increased utilization of the Earned Income Tax Credit (EITC), Volunteer Income Tax Assistance (VITA), other free tax preparation services and asset formation programs. Earn it. Keep it. Save it. Coalition partners work together to raise awareness about the EITC through marketing, outreach and partnerships with local businesses, and other institutions. Coalition partners also provide free tax preparation services to low-to-moderate income-workers at more than 50 locations throughout the state. In addition to providing free tax preparation assistance, coalition partners and volunteers also connect tax filers to financial information and services.

What is the Earned Income Tax Credit (EITC)?

The EITC (Earned Income Tax Credit) is a refundable federal tax credit that can increase the effective wage of qualifying workers by up to $2/hour. As many as 40,000 households fail to file for the EITC because they are not aware of the credit, they don’t earn enough to be required to file taxes or because of education and language barriers. It is estimated that between $60-$80 million in federal EITC money is left unclaimed by Utahns each year. An economic impact study commissioned by United Way of Salt Lake found that each increase of 10,000 households in utilization of the EITC could bring an additional $17 million in direct EITC payments to Utah and generate approximately $63 million in additional state and local economic activity.

What is Volunteer Income Tax Assistance (VITA)?

VITA is a program implemented through the statewide Earn It. Keep It. Save It. campaign by local community coalitions that provide free tax preparation services to low-income households. VITA volunteers work with tax filers to ensure that the tax filer receives all of the credits to which they are entitled, including the EITC. The Earn It. Keep It. Save It. Campaign also works to implement other free tax preparation services, through relationships with community partners. To be eligible for free tax preparation a household’s income must be under $49,000.

Current Status

Regional coordinators throughout the state are working to recruit and train volunteers, establish partnerships with employers and implement a new online system for connecting families with both critical work supports like child care, and with financial products such as checking and savings accounts. In addition, coalition partners are working to raise awareness of new tax credits and expanded tax credits for tax payers in 2010.

Key Facts

• The Federal Earned Income Tax Credit (EITC) was established by Congress in 1975 to offset the burden of Social Security and Medicare taxes on low-income taxpayers, to supplement wages for low-wage workers, and to make employment more attractive than welfare.

• The EITC was expanded in 1986 with President Reagan calling it “the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.”

• The American Recovery and Reinvestment Act of 2009 expanded the EITC to include a temporary increase for taxpayers with three or more qualifying children and raised the maximum EITC to $5,657.

• Working individuals and families making less than $49,000 per household may qualify for the EITC.

• Over 50 VITA sites exist throughout the state of Utah

• Each of the 686 volunteers is certified by the IRS as a tax preparer

• More than $1.6 million is saved in tax preparation fees annually by tax filers using VITA sites.

For more information, you can dial 211 or visit www.utahtaxhelp.org

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