Guest Post: New Financial Education Guide for VITA Programs and Their Clients
The Earned Income Tax Credit (EITC) is one of the nation’s largest anti-poverty programs. The EITC reduces the tax burden on workers, supplements wages, helps low-income families build assets and reduces income inequality. Annually, the EITC helps 6.6 million Americans move out of poverty; half of these are children. In 2010, over 26 million workers received nearly $59 billion in EITC. The average credit was $2,100, but can be as much as $5,751, depending on the worker’s income, marital status and whether they have children.
Awareness is critical. Only four out of every five eligible taxpayers claim and receive the EITC. Ideally, all eligible taxpayers would claim their EITC. The IRS, Center on Budget and Policy Priorities (CBPP) and countless other nonprofit and community-based organizations have mounted campaigns to make sure that eligible taxpayers know they can claim this credit.
Making sure that affordable tax assistance is available to these families is equally important. The IRS, numerous foundations and community organizations also support programs that provide free tax assistance to low- and moderate-income families. Volunteer Income Tax Assistance (VITA) programs, for instance, offer a valuable service to working Americans by helping them keep more of their hard earned money, especially if they quality for the EITC.
An important element of many successful EITC campaigns is connecting workers to asset-building opportunities. Financial education, asset-building tools, safe financial products, credit repair resources, and more can help families use their returns to build assets.
To that end, CFED has partnered with Bank of the West to create a new Financial Education Guide for taxpayers receiving assistance at VITA programs. This, free, easy-to-read guide (available in English and Spanish) walks clients through some important things to consider when they receive their refunds to helps them make the most of the money they expect to receive. This guide and the included Savings Plan Worksheet can help taxpayers:
- Recognize the value of using the tax moment to contribute to their short- and long-term savings goals
- Make decisions about how to use their refunds for spending on “must-haves,” saving for the future and spend on “nice-to-haves”
- Get connected to resources like U.S. Savings Bonds, College Savings Accounts, additional tax credits like the Saver’s Credit, Individual Development Account programs and Bank On campaigns
Click here to download the Financial Education Guide to print and share with taxpayers at your VITA sites!
By Lauren Williams, Corporation For Enterprise Development