2006 Annual Statewide Legal Aid Training Conference

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2006 Annual Statewide Legal Aid Training
Conference I-CAN! EIC Presented by Glenn
Rawdon, LSC grawdon_at_lsc.gov
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What is the Earned Income Tax Credit?
The Earned Income Tax Credit (EITC) is a special
federal income credit for low-income working
individuals and families. The EITC has been
credited with lifting more children out of
poverty than any other single program.
Promoting the Earned Income Tax Credit (EITC) is
a great way to incorporate Economic Development
in your organization.
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If you could hand your clients 4,500, how would
that make you feel? IRS estimated in 2002 that
15 - 20 of Virginia residents eligible for EITC
did not file In 2003, Virginians claimed
841,062,650 in EITC. This means at least
126,159,390 went unclaimed!
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EITC is a Priority

• You might say that doing taxes is not a program
  priority, but what about
• Housing EITC can reduce the housing gap by more
  than Section 8
• Preservation of income EITC and Child Tax
  Credit can boost wages by 1.50 to 2.50 an hour
• Eliminating Poverty In 2003 EITC directly
  lifted 2.3 million children above the poverty
  line

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Maximum EITC Return Amounts for the 2006 Tax Year

• 4,536 with two or more qualifying children
• 2,747 with one qualifying child
• 412 with no qualifying children

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EITC Income Guidelines for the 2006 Tax Year
Number of Qualifying Single
Married Children 2 36,348 38,348
1 32,001 34,001 0 12,120 14,120

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Need for Earned Income Tax Credit Awareness
Outreach
It is a credit that remains under-utilized. Many
who are eligible for the EITC do not know about
the EITC or how to claim it. Those that do claim
the credit often use paid tax preparers who
encourage so-called Rapid Cash (Refund
Anticipation Loans) which can take up to half of
the refund in fees and interest!
15-25 of those eligible do not claim the EITC
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Who is Eligible for the Earned Income Tax Credit?

• Be a U.S. Citizen or Legal Permanent Resident
• Have Earned Income in 2005
• Have a Valid Social Security Number
• Not Qualify as the Dependent of another person
• Investment Income must be less than 2,800 (if
  applicable)
• If the number of qualifying children is 0, must
  be 25 years or older

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I-CAN! E-File I-CAN! E-File will help your
clients and community members claim the EITC
absolutely FREE!

• Accessible via the Internet (www.icanefile.org)
• Absolutely Free
• Written at a 5th grade literacy level
• Simple screens that guide a taxpayer
• Helps clients and community members become more
  self-sufficient

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Who Can use I-CAN! E-File?

• Those who are Eligible for the EITC
• Expansion Those with earned incomes under
  50,000

• I-CAN! E-File Target Markets
• EITC Eligible
• College Students
• Low-to-Moderate Income Taxpayers not Eligible
  for the EITC

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What Forms can I-CAN! E-File Complete?
Form 1040 Form 1040A Form 1040 EZ Form 1040
Schedule 2 Schedule C  Schedule C EZ Schedule
SE (Short Form) Schedule EIC Child Tax Credit
Worksheet Student Loan Interest Deduction Child
Dependant Care Expenses (Form 2441) Additional
Child Tax Credit (Form 8812) Education Credit
(Form 8863
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What Credits will I-CAN! E-File Complete?
Child Tax Credit, Additional Child Tax Credit,
Education Credit, Savers Credit, Student Loan
Deduction, and Child and Dependent Care
Expenses Credit. Special Gulf Area (Hurricane
Katrina relief modifications) Telephone Credit
(NEW)
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I-CAN! E-File

• Password
• No Email Address Required
• Direct Deposit
• E-File
• Taxpayer can go back 2 years (04 05 tax years)
• Demo

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Formula for Unclaimed EITC Dollars
Step 1 Find the total number of those who
claimed the EITC for a city, county or
state. Step 2 Multiply the number from step 1 by
.15 for a conservative estimate and .20 for a
maximum estimate. This step will give you the
number of taxpayers who were eligible but did not
claim the credit. Step 3 Multiply the number in
step 2 by 1,700 which is the average EITC amount
returned. This number may be higher or lower
depending on your geographic area. This number
gives you the amount of EITC dollars unclaimed.
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Ways to Participate in the EITC Collaboration

• Post information and a link on your website
• Tracking Mechanism
• Distribute or Mail Materials to clients and
  community members
• Include an article in your newsletters or
  bulletins
• Host a computer workstation for taxpayers to use
  
• Tracking Mechanism
• Organize a Community Coalition
• Post I-CAN! E-File Flyers/Posters

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Steps to Start Taking

• Decide how your organization wants to be
  involved
• Resources Staff available
• Integrate into intake procedures
• Start seeking volunteers/academic interns
• Look into possible funding banks, city, county,
  etc.
• Start networking with other community based
  organizations
• Sign the MOU to receive a tracking number
• Create a timeline for your organization
  depending on participation

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Suggested Timeline
Pre Tax Season 1 (October November) Planning
Outreach, Developing materials Connecting with
other organizations Pre Tax Season 2 (December
mid January) Executing Outreach Strategies
Connecting Tax Season (mid January
April) Continue Outreach Spikes are at the
beginning of February and mid-April
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You Can Make a Difference!
For 2004 tax year, Michigans use of I-CAN! EIC
was 92 returns for 106,306 For 2005 tax year,
Steve Gray took it on to promote I-CAN! EIC,
mainly working with credit unions For 2005 tax
year, Michigan returned 1,013,186 to clients
using I-CAN! EIC
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Contact Information
Jeanette Valencia EITC Program Coordinator 714-571
-5269 jvalencia_at_legal-aid.com
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Resources

• Legal Aid Society of OC
• WWW.EICPARTNER.COM
• Demo Link Script
• Sample/Modifiable Outreach Materials
• Implementation/Outreach Plans
• Memorandum of Understanding (MOU)
• General Resource Info

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Additional Resources

• The Brookings Institute
• Create EITC Tables
• http//webapps.brookings.edu/EITC/
• Reports EITC from its 1st 30 years
• http//www.brookings.edu/metro/pubs/2006
  0209_Holt.htm
• Center on Budgets and Policy Priorities
• Earned Income Tax Credit Child Tax Credit
  Outreach Kit
• http//www.cbpp.org/eic2006/
• National EITC Outreach Partnership
• http//www.cbpp.org/eitc-partnership/