EITC and the IRS

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EITC and the IRS

• Leland Smith and Brian Cahill
• IRS Seattle WA
• Contact Your Local Coalitions Coordinator
• Sylvia Martinez IRS SPEC
• [phone]
• sylvia.L.Martinez_at_irs.gov

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EITC and the IRS

• Free tax Preparation in WA
• IRS Staff Functions
• Reaching Low Income
• Tax Credits and Financial Education

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EITC aka EIC

• Earned Income Tax Credit
• Enacted in 1975
• Expanded in 1990, 1993, and 2009 (ARRA)
• Refundable!
• Parents with children Low Income Singles
• Offset Social Security Withholding FICA

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EITC Expanded!

• The American Recovery and Reinvestment Act (ARRA)
  
• Temporary (TY 09 10) increase in EITC
• For taxpayers with three or more qualifying
  children.
• Max EITC for this new category is 5,657

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EITC Expanded!

• ARRA also upped the phase out for all married
  couples filing a joint return.
• Phase out
• Begins at 21,420 for MFJ with children
• Gone at
• 40,463 for one child,
• 45,295 for two children and
• 48,279 for three or more children.
• For MFJ with no children, phase out starts at
  12,470 and
• Completely phased out at 18,440.

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Income Limits for 2009

• 43,279 (48,279, MFJ) with 3 or more children
• 40,295 (45,295, MFJ) with 2 or more children
• 35,463 (40,463, MFJ) with 1 child
• 13,440 (18,440, MFJ) with no children

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The Maximum Benefit for 2009

• 5,657 with 3 or more children
• 5,028 with 2 or more children
• 3,043 with one child
• 457 with no children

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EITC is one of the Largest Antipoverty Programs

• 24 million received almost 48 billion for tax
  year 2007
• Participation is estimated at 75 to 80
• Five million people, half of them children,
  lifted out of poverty each year due to EITC
• The cost of administering EITC program ratio to
  claims paid is less than one percent

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Basic Qualifications

• Have a valid Social Security number
• Not file as married filing separate
• Not file Form 2555 or Form 2555-EZ (related to
  Foreign Earned Income)
• Meet the investment income limitation (3,100 for
  tax year 2009)
• Have earned income
• Not be the qualifying child of another person
• Be a U.S. citizen or resident alien for the
  entire year

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Free Tax Prep in WA

• Coalitions

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Free Tax Prep in WA

• Coalitions
• VITA and Tax Aide
• Nearly 72,000 returns total free returns,
• Nearly 50,000 by Tax Aide
• More than 10,000 Military VITA

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IRS SPEC

• Nationwide -
• Stakeholder Partnerships, Education and
  Communication, or SPEC
• 60 national partners and 12,000 Sites.

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SPEC AREAS and TERRITORY OFFICES
10/2009
WA
ND
MT
Cincinnati
Seattle
MN
ME
WI
Portland
ID
SD
MI
VT
St. Paul
Buffalo
WY
NH
OR
NY
Boston
NE
MA
NYC
Detroit
IA
RI
Pittsburgh
Chicago
OH
Omaha
Columbus
PA
Hartford
NV
CT
CO
IL
Newark
Indy
MO
UT
NJ
KS
Sacramento
IN
Denver
WV
DE
Kansas City
VA
Las Vegas
MD
Oakland
KY
OK
TN
NC
Washington DC
AZ
Nashville
Fresno
AR
Greensboro
Oklahoma City
Richmond
NM
AL
Los Angeles
MS
GA
SC
Columbia
San Marcos
Dallas
Birmingham
Phoenix
TX
LA
El Paso
Atlanta
AK
FL
Houston
HI
New Orleans
Tampa
Austin
PR
Plantation
Area 1 Atlanta Loss Washington, DC
Territory Gained Atlanta Territory New Territory
Office Columbia, SC New PODs Wilmington
Asheville, NC Savannah, GA
Area 2 Cincinnati Loss Atlanta Chicago
Territories Gained Washington, DC Birmingham
Terrs. Collapsed Jacksonville -Now POD of Tampa
Terr Reactivated Richmond Territory New PODs
Traverse City, MI Knoxville, TN
Area 3 Austin Loss Birmingham
Territory Gained Chicago Territory Collapsed
Milwaukee Territory now a POD of Omaha
Territory
Area 4 Fresno Reactivated Seattle Territory New
PODs Santa Maria Santa Ana, CA
Realignment proposals used a staffing model that
was data driven, based on staffing needs,
penetration rates, and coverage to rural and
other large populated areas. SPEC will continue
to use the staffing model to identify future
hiring needs. The overall result will be improved
service to leveraged stakeholders and ultimately
underserved Taxpayers. Each Area office gained
a Stakeholder Planning Analysis Section which
includes an IR-01 Senior Manager.
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IRS Staff Functions

• Data Mapping

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Dollars
695,716,346
5,349,297,531
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EITC By Zip Code
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IRS Staff Functions

• VITA and Tax Aide Site Set Up and Support
• Volunteer Training
• Tax Wise Software
• Materials and tools

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IRS Staff Functions

• VITA and Tax Aide Site Set Up and Support

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IRS Staff Functions

• EITC Assistant

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IRS Staff Functions

• EITC Central

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EITC CENTRAL
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Partner Page
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EITC CENTRAL AGAIN
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Reaching Moderate Income

• Why the IRS needs your help.

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Who are we missing?

• Living in rural areas
• Self-employed
• Disabled
• Childless 
• Not proficient in English (LEP)
• Older (grandparents)
• Recently divorced, unemployed, or experienced
  other changes to their marital, financial or
  parental status

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EITC By Zip Code Different Scale
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Promote EITC

• Insert tax credit information in monthly utility
  bills or online newsletters.
• Incorporate tax credit information when promoting
  energy payment assistance programs.
• Train customer service employees
• Display posters
• Alert your own employees
• Support free tax preparation sites with printers,
  computers etc.

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EITC and the IRS

• Tax Credits and Financial Education

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Tax Credits and Financial Education

• EITC as the Lab Portion of the Financial
  Literacy Class
• The only way to claim EITC is to file a tax
  return.

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Pub 4716
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• Publication 4537, EITC Made EZ bookmark
• Publication 4471, EITC Made EZ brochure
• Publication 73271N, Social Security Card Poster

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Why is the EITC Important to Your Community?

• EITC dollars are spent locally (number one use
  of EITC refunds pay bills)
• Pay for reliable transportation
• Secure convenient child care options
• Cover medical expenses
• Buy food and other basic necessities
• Keep current on rent and utility payments

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How do you claim the EITC?

• You must file a tax return!
• If you qualify and failed to file for the EITC
  you can file for and claim the credit for up to
  three prior years.

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Free Tax Filing Assistance

• IRS Certified Volunteers provide FREE tax
  preparation of basic tax returns in your
  communities
• Their customers are
• Elderly
• Low to middle income
• Limited English Speaking
• Disabled
• Free efile at www.irs.gov
• IRS offices prepare returns for free with income
  guidelines

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Why is outreach needed?

• As many as 15-20 of eligible workers don't claim
  the EITC
• 75 of those who claim the EITC pay commercial
  fees to file returns which can include loan fees
  and charges for other related products.

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In Fact

• A survey of EITC recipients conducted by Syracuse
  University found that
• paying delinquent utility bills
• is one of the top ways recipients spend their
  EITC refunds.

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Resources

• Center on Budget Policy Priorities
• Outreach Campaigns
• www.cbpp.org/eic
• Brookings Institute Website
• www.brookings.edu/metro/EITC/EITC-Homepage.aspx
• EITC Claims State, City, County
• Data at Zip Code Level
• Number of Claims, Dollars Claimed
• Number of EITC Claims with a Refund Loan

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