Tax Credits Lift Millions of Children and Working Families Out of Poverty
What if we told you that there was a proven solution that lifts millions of children and working families out of poverty each year? A tool that improves child health and academic achievement, enables financial stability for hard-working families, and pumps billions of dollars back into local communities around the country? Well, there is! And it’s called the Earned Income Tax Credit (EITC).
The Earned Income Tax Credit is a little-known benefit for people who work and have low to moderate wages. Many potentially eligible people miss this credit, which could increase their income by up to $6,143. A single person who earned less than $14,800 last year and a family of five that earned less than $53,200 may qualify for a refundable EITC. Low-income seniors may qualify for the Tax Credit for the Elderly. For the 2014 tax year, according to the IRS, the average refund was about $2,400.
United Way, our community partners, and numerous volunteers each year take action to connect hundreds of our Frederick neighbors to the EITC. In the 2014 tax season alone, United Way of Frederick County, through the Volunteer Income Tax Assistance (VITA) program, helped connect 852 households to $1.2 Million in tax refunds – money coming right back into our community. They got their taxes done for free at our Prosperity Center saving them approximately $127,800 in tax preparation fees.
Simply put, the Earned Income Tax Credit helps lower-wage working families keep more of what they earn. Research finds that the EITC encourages work, reduces poverty and leads to long-term gains in child health and academic success. Together with the Child Tax Credit (CTC), another essential credit that helps offset the cost of raising children, the credits lifted more than 9 million people – 5 million of them children – out of poverty in 2013 nationwide. The credits also help 22 million lower-income Americans have further financial stability.
This is why we advocate to strengthen and expand the EITC for working families and individuals. Last year, our collective advocacy prevented 50 million Americans from losing all or part of their credits, further preventing 16 million from falling into poverty or toppling in deeper by making expiring provisions of the EITC & CTC permanent.