A Final Harvest of Tax-Prep Tips this Thanksgiving Season!

What?! More talk of taxes?! Yes! It’s hard to overstate the important role the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) play in rural communities. Each year, thousands and thousands of rural families across the U.S. – and their communities – are thankful for the valuable boost these refundable tax credits provide to their bottom line. That’s why, for our Thanksgiving message to RuFES network members, we’re stuffing one closing Action Alert with lots of ingredients to help you prepare a rousing RuFES tax season.

So let’s talk turkey: Now is the time to get your 2013 tax season efforts cooking. To help you, we’ve prepared a healthy portion of tax-time tips and facts, as well as a buffet of resources to meet all your tax-time needs. Read on to learn more about important refundable tax credits for working families, why we’re talking about them now, and what you can do to jumpstart efforts in your community!

What are the EITC and CTC?

The Earned Income Tax Credit and Child Tax Credit are refundable tax credits available to individuals and families with earned income, even if they do not owe any taxes. The EITC and CTC are among the most popular and effective strategies rural communities use to help working families Keep more of what they Earn and improve their livelihoods in the long-term.

Why are we talking about taxes in November?

Because now is the time to start promoting the EITC and free tax services, such as Volunteer Income Tax Assistance (VITA) sites, to ensure that low-income working families receive the hard-earned benefits they deserve. Paid tax preparers and predatory preparers have already begun to market their services aggressively, and families need to know that other options exist. According to a recent National Community Tax Coalition (NCTC) fact sheet, “VITA clients claiming the EITC [in 2011] were able to save an estimated $90 million in costs they would have incurred at commercial preparers, thus retaining more of their own, hard-earned money at tax time.” A 2009 report from NCTC and The Hatcher Group suggests that an even greater potential for savings exists, as the vast majority – over 75% – of EITC recipients use paid tax preparers to file their taxes. In order to ensure that low-income families take advantage of low-or no-cost tax services, these efforts must be promoted sooner rather than later.

What difference do the EITC and CTC make for rural families?

The EITC is considered to be the largest anti-poverty program in America – far larger than any other social-net programs, like welfare (TANF) or the Supplemental Nutrition Assistance (SNAP) program. In 2010 alone, the EITC and CTC lifted more than 9 million people above the poverty line – half of them children. The benefits of these refundable credits are not limited to the short-term, however! Recent studies show that children in families receiving the EITC perform better in school than children from families who qualify but do not receive the tax credit. When those children become adults, they are more likely to have more work hours and higher earnings, thus helping them forge more stable and predictable financial lives over the long-term.

How can rural communities leverage the EITC and CTC to promote Family Economic Success?

Here are three ways that communities can help hard-working families take full advantage of tax benefits for which they qualify:

• Increase awareness of the EITC and CTC. Many people do not file tax returns because they do not know tax credits exist or that they qualify for the refund. Promoting the EITC and CTC through flyers, advertisements, radio, and events is one way to ensure that low-income families know about these valuable tax credits.
• Help individuals file for the EITC and CTC. Volunteer Income Tax Assistance (VITA) sites are free tax preparation sites where local volunteers trained by the IRS help low-income families prepare taxes. These sites provide an alternative to expensive or predatory tax preparers whose costly fees can significantly offset the value of the refundable credits.
• Encourage asset-building. Talking to individuals about tax refunds offers an opportunity to shift conversations toward asset-building. Free tax prep sites can be great places to promote individual development accounts (IDAs), savings bonds, financial education programs, or other strategies that can help families use their tax refunds to Grow their assets over time.

What resources exist for starting or strengthening programs?

Good news! You don’t have to start from scratch to develop a successful EITC campaign. Many organizations provide ready-made materials, such as flyers, training manuals for VITA site volunteers – even sample newsletter articles and Twitter posts – to help you develop and promote your tax-time efforts! Check out the following list for links to a wide variety of resources that can help you get started.

• Click HERE to watch Ready… Set… Tax Prep!, the RuFES ReFresher webinar that was broadcast November 8, 2012. Session I provides an overview of the EITC and CTC, a summary of EITC updates, and resources to strengthen your program. Session II includes success stories from rural communities using employer-based VITA sites, mobile VITA sites, and Virtual VITA sites to increase EITC uptake. By clicking the link above, you can also download PDFs of the presentation slides and a list of resources shared by the webinar presenters.
• The National Community Tax Coalition (NCTC) provides a wealth of training materials, data, and policy tools to promote the EITC.
• The Center on Budget and Policy Priorities (CBPP) National EITC Outreach Campaign has a number of resources to promote the EITC, free tax preparation alternatives, and asset development strategies. The National EITC Outreach Partnership has developed a list of EITC coalitions by state so that you can find out who to partner with on EITC efforts in your area. To see great examples of EITC outreach in action, check out CBPP’s Outreach Database.
• The Internal Revenue Service (IRS) EITC Central provides outreach and training materials for tax preparers and partners. IRS Stakeholder Partnerships, Education, and Communication (SPEC) is the outreach and education department of the IRS. They provide EITC forms, publications, toolkits, brochures, and other resources.