It’s been hailed as one of the most effective tools to fight poverty in the country. Working families earning less than $56,000 per year are eligible for the Earned Income Tax Credit (EITC), which puts an average refund of $2,100 back in their pockets. For many families, getting the full tax refund they have earned is a budget boost that pays for heat or housing, pays down debt, provides much-needed savings, serves as a down payment on a car or advances their education. But the Internal Revenue Service estimates that one in five families who are eligible for the EITC do not claim it on their returns.
In Massachusetts, that’s potentially another 98,000 people and an additional $206 million left on the table — money that families could be reinvesting into the economy and local communities when they buy groceries, fill their gas tanks, or pay for childcare.
According to Prosperity Now, in 2018, the EITC and the Child Tax Credit combined lifted 10 million people out of poverty nationwide, including 5 million children. United Way is committed to helping ensure low- to middle-income taxpayers in our region make the most of tax season and maximize their tax refunds. The EITC and other tax credits are most often left unclaimed because people are unaware of their eligibility and do not claim them when they file their taxes.
As part of our mission to help create economic mobility for families in need, United Way has two big efforts to help families maximize their returns. First, this year we removed the income cap for myfreetaxes, a partnership between United Way and H&R Block, allowing anyone with simple returns to file state and federal for free.
Second, we raise funds to support eight free Volunteer Income Tax Assistance (VITA) sites to help eligible individuals navigate the complicated filing process in cities across our region, including Beverly, Boston, Chelsea, Quincy, Salem, MA and Portsmouth, New Hampshire.
“Utilizing VITA sites like QCAP is critical for people who really need a service that files their taxes correctly at no cost and helps connect them to other needed services and supports. It’s a practical way to take a step toward achieving financial stability,” says Beth Ann Strollo, Chief Executive Officer at QCAP.
Last year, with the help of over 250 volunteers contributing over 8,800 volunteer hours, these eight sites filed over 5,335 returns, helping filers claim over $8 million in tax credits and refunds. The EITC alone made up more than $2.4 million of those refunds for people to reinvest in the economy and their communities.
United Way’s community partners in the volunteer tax prep include Beverly Bootstraps, Chelsea CONNECT, the City of Boston’s Office for Financial Empowerment, Greater Lawrence Community Action Council, Jewish Vocational Services, North Shore Community Development Corporation, Quincy Community Action Programs and Southern New Hampshire Family Services.
“We run this program because it provides greatly needed resources for our community and encourages people to work,” says Evelyn Friedman, Executive Director at Lawrence Community Action Council. “Our average client in the program makes $22,000 per year and receives $2,200 in refunds. That is 10% of their annual income. The United Way support gives us the base for running our program, which is so needed and necessary.”
Adds Heather Johnston of Beverly Bootstraps: “The tax prep program is vital for our clients, who do not have the resources to pay to have their taxes done. Many have very complicated situations. Knowing that they can come here and be helped by IRS trained volunteers gives them the reassurance that they will get what they need and will leave knowing they are getting the EITC refund that will pay for daily living expenses or put a little in savings.”
To help raise awareness in the community and among eligible workers of the free tax preparation service and its benefits, organizations rely on getting the word out through mailings, social media, and email reminders to people who have used the services in past years.
Most filers claiming the EITC work in industries such as food service and retail, where they may work more than one job, or non-typical business hours. Recognizing that working families already have many demands on their time to juggle, CONNECT is for the first time offering drop-off services to clients, where filers can shorten their visit to a quick 30-minute intake, and come back within one week to collect their finalized taxes and return. “This increases the number of clients we can assist in the community by providing services to meet the needs of different people,” says Madeligne Tena, Financial Capabilities Manager at CONNECT.
CONNECT is also launching a new partnership with Massachusetts General Hospital (MGH) Chelsea HealthCare Center during this year’s tax season. Through this innovative partnership, potential clients that are flagged for eligibility during their health care appointments at MGH are informed about the VITA program, and are assisted with making an appointment. This enables CONNECT to reach members of the community that might not come across the VITA services otherwise.
For many families, maximizing their tax credits and refunds can be a critical first step toward increasing their overall financial stability. Most of United Way’s supported sites are also part of our network of Financial Opportunity Centers, which provide financial coaching, budget building, credit repair and maintenance, and more to help families reach their financial goals.
“VITA directly aligns with our mission and goals to support and enhance people’s financial health and well-being,” says Tena at CONNECT. “It introduces new members of the community to CONNECT services and resources, so that we can start to build a relationship with them and create a plan to work towards achieving their goals. Over the years, many clients first came into CONNECT for tax assistance, and then graduated onto financial coaching or other services to fix their finances, find a new job, and to pursue their dreams.
Filers can call 2-1-1 to find out where free volunteer tax preparation services that are offered in or near their community. Filers who can’t get to a VITA site in person also have the option of filing both federal and state returns for free using MyFreeTaxes.com, a partnership between United Way and H&R Block.