Earned Income Tax Credit

Earned Income Tax Credit (EITC) Programs

What is the Earned Income Tax Credit (EITC)?

EITC is a catalyst for low-income families’ economic success. EITC is now a way to supplement wages while making work more attractive than welfare. The current credit can add as much as $4300 to a family’s annual income. The EITC credit reduces taxes for workers, supplements wages and makes work more attractive. As traditional welfare programs continue to change, EITC is the single largest federal aid program for working families. The EITC Program is larger than food stamps, and Tax Assistance for Needy Families (TANF) combined. About 20 million families received some $37 BILLION – an average of nearly $1800 for the 2003 tax year. The EITC lifts over 4.7 million people out of poverty each year, including 2.5 million children. It has the ability to turn a $7 per hour job into a $9 per hour job.

What are Benefits of Starting an EITC Program in Your Computer Center?

Many computer centers have started EITC programs to assist people in the community in claiming their earned income tax credit, file their taxes and increase their income. A qualified individual must first and foremost file a tax return (whether tax is owed or not) and complete “schedule EIC” (affirmative action required). To be eligible for a full or partial credit, a taxpayer must have earned income and adjusted gross income of less than:

• $34,458 (35,458 for MFJ) with two or more qualifying children
• $30,338 (31,338 if MFJ) with one or more qualifying child
• $11,490 (12,490 MFJ) with no qualifying children

The MAXIMUM EITC is:

$4,300 for taxpayers with two or more qualifying children

$2,604 for taxpayers with one qualifying child

$ 390 for an individual without qualifying children

What can a Community Computer Center do with EITC?

Community Computer Centers are equipped to do free online tax filing (e-file), available on the Internal Revenue Services webpage, for people of low income. Studies show that many taxpayers who qualify for EITC do not claim it (up to 25% per independent studies)[1] Computer centers can therefore inform, train, and give access to eligible taxpayers. In other words, computer centers can mobilize large numbers of low income people to take advantage of this great opportunity!

Where can I get more information about the EITC Program?

To contact you local representative, you can visit the IRS website at http://www.irs.gov/localcontacts/index.html or visit the following web pages:

• • www.irs-eitc.info/SPEC (IRS site on EITC)
  • www.cbpp.org (Center on Budget and Policy Priorities site and access to EITC toolkit)
  • www.tax-coalition.org (National Tax Coalition site)
  • www.brookings.org (Brookings Institution - key word: EITC)
  • http://www.cbpp.org/eitc-partnership/eitc-partnership.htm (National Outreach EITC Partnership)