Can a tax credit reduce poverty?

January 26, 2017

Can a tax credit reduce povertyToday we heard from our friends at the Ore­gon Cen­ter for Pub­lic Pol­icy (OCPP) and 211.org.  Both orga­ni­za­tions are shar­ing time sen­si­tive and crit­i­cal infor­ma­tion regard­ing the Earned Income Tax Credit (EITC).

What is the EITC, and why does it mat­ter? The EITC is a tax credit that ben­e­fits low (and mod­er­ate) income fam­i­lies when they file their taxes. It allows fam­i­lies to keep more of their earned income through a refund­able tax return. That money can be used to help pay bills and other necessities.

It is known as “one of the most effec­tive tools for alle­vi­at­ing poverty…When com­bined with the fed­eral Child Tax Credit, the fed­eral EITC helped lift 129,000 Ore­go­ni­ans, includ­ing 65,000 chil­dren, out of poverty each year between 2011 and 2013.” (Ore­gon Cen­ter for Pub­lic Pol­icy).

Accord­ing to the OCPP, Ore­gon fam­i­lies expe­ri­enc­ing poverty are miss­ing an oppor­tu­nity to claim about $130 mil­lion per year when they file their taxes at year end. In fact, Ore­gon has one of the low­est rates of par­tic­i­pa­tion in the EITC among tax fil­ers who are eli­gi­ble. This means that Ore­go­ni­ans that qual­ify to receive the credit are not nec­es­sar­ily get­ting it.

So what can you do? Help spread the word about EITC and get folks con­nected to resources to make sure that they receive the tax credit if they are eli­gi­ble. Taxes can be con­fus­ing, but there are resources available:

  • CASH Ore­gon — Shares infor­ma­tion on free tax assis­tance loca­tions and fil­ing infor­ma­tion across the state of Ore­gon. Learn more about CASH Ore­gon or search their data­base for a loca­tion near you to find free in-person tax fil­ing assistance.
  • The IRS Free File Sys­tem web­site includes infor­ma­tion on the Vol­un­teer Income Tax Assis­tance (VITA) pro­gram (free tax help to peo­ple who gen­er­ally make $54,000 or less, per­sons with dis­abil­i­ties and lim­ited Eng­lish speak­ing tax­pay­ers who need assis­tance in prepar­ing their own tax returns), and Tax Coun­sel­ing for the Elderly (TCE) (offers free tax help for all tax­pay­ers, par­tic­u­larly those who are 60 years of age and older, spe­cial­iz­ing in ques­tions about pen­sions and retirement-related issues unique to seniors). Find a loca­tion near you and learn more
  • AARP Foun­da­tion Tax-Aide — Free tax ser­vices for every­one, but spe­cial­izes in taxes for folks who are over 50 years old and have dif­fi­culty afford­ing a tax prepa­ra­tion ser­vice. Learn more and find a loca­tion near you!

 

Source: Oregon’s Low EITC Par­tic­i­pa­tion Leaves Over $100 Mil­lion Unclaimed  by the Ore­gon Cen­ter for Pub­lic Pol­icy (2017).

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  • The training taught me to “manage what I have better and be more aware of the stress level it causes to not be able to meet ‘your’ needs.” (Poverty Awareness Training participant)