Regional Earned Income Tax Credit Initiative (EITC)

Presentation to Agency Providers

January, 9, 2015

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Regional EITC – What Is It?

• Earned Income Tax Credit (EITC)is a fully-refundable tax credit based on income, filing status and family size.

• Enacted by Congress in 1975 to reward work and off set social security taxes.

• Could reduce the amount of federal tax owed, reduce tax owed to zero, or even produce a refund beyond the amount of tax withheld.

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Regional EITC – Why?

Unclaimed Money:

• It is estimated that 20% of eligible EITC individuals/families do not claim the credit.

• It is estimated that each year, 30% of EITC claims are new claims.

• The average EITC claim nationally is over $2,355.

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Regional EITC – Why?

Save Money-Avoid Unnecessary Costs!

• RALs are loans secured by a taxpayer’s anticipated tax refund.

• RACs are temporary bank accounts established on behalf of a taxpayer into which a direct deposit refund can be received and out of which a bank typically issues a payment to the taxpayer.

• With both RALs and RACs, tax preparation and product fees are subtracted directly from the refund, and the taxpayer does not make any “out-of-pocket” payments. They are frequently marketed to taxpayers who do not have cash to pay for professional tax preparation services.

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Regional EITC – Who Is Eligible?

• Must have “earned” income and you must file a tax return.

• Must meet certain rules and must file a return (even if the claimant does not owe any tax or did not earn enough money to require filing a return).

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Regional EITC – Who Is Eligible?

Earned Income and Adjusted Gross Income (AGI) must be below:

•$46,997 ($52,427 married filing jointly) with three or more qualifying children

• $43,756 ($49,186 married filing jointly) with two qualifying children

•$38,511 ($43,941 married filing jointly) with one qualifying child

•$14,590 ($20,020 married filing jointly) with no qualifying children

Investment income must be $3,300 or less for the year.

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Regional EITC – Maximum Refundable Credits:

• $6,143 with three or more qualifying children

• $5,460 with two qualifying children

• $3,305 with one qualifying child

• $496 with no qualifying children

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Regional EITC – How Is It Delivered?

29 free (VITA) tax prep sites throughout our region (one-on-one):

• In Ohio-Butler, Hamilton and Clermont counties

• In Kentucky-Boone, Campbell and Kenton, Carrol, Gallatin, Grant, Owen, Pendleton counties

• In Indiana -Ohio and Dearborn counties

Eligible for free service if income is below $53,000. Offered through trained volunteer tax preparers. (www.makeworkpay.com)

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Other Free Tax Preparation Options (self preparation):

One line free file software available for taxpayers earning less than $58,000.

• (www.myfreetaxes.com)

• (www.irs.gov/freefile)

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Regional EITC – 2014 Results

Total Number Returns 19,832

Total Returned $20.9 million

Total Fees Saved $ 3.9 million**

Number Volunteers 753

Number Sites 126

All numbers include VITA, AARP and Benefit Bank

(**) based on $200 estimate for paid preparer

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I Think My Client May Qualify-What Should I Do Next?

• Help spread the word to your clients/consumers (mailings, emails, meetings).

• Call 2-1-1 to locate the nearest Volunteer Tax site or www.makeworkpay.com.

• Volunteers will prepare your tax return and file it OR you can file yourself on-line - and it’s free!

• Become a volunteer tax preparer yourself and help families receive this free service.

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Regional EITC

Thank You!