Tax Season is Crucial for Promoting Economic Opportunity•
When most people think of taxes, they typically don’t connect them with the idea of “economic opportunity.” But the truth is, tax time is a crucial moment for many American families that are able to take advantage of refundable tax credits for which they may qualify. These include the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC) or the American Opportunity Tax Credit (AOTC). Qualifying families can use their refunds to pay for basic needs or use the money as a catalyst to start saving in case of emergency, such as opening a savings account or buying a U.S. Savings Bond. In addition, the heightened attention paid to family finances at tax time can open the door to other services, such as credit counseling or receiving assistance with the Free Application for Federal Student Aid (FAFSA).
The National Community Tax Coalition (NCTC) and its member organizations are privileged to work with many such families through Volunteer Income Tax Assistance Programs (VITA). These programs enable families to receive the tax credits and refunds for which they’re qualified, but without cutting into these supports by charging costly tax preparation fees.
One VITA client was a single working mother from Oklahoma. After receiving the EITC and AOTC, she was able to purchase reliable transportation to get to and from work. Another client, from Washington, was working full-time at minimum wage. He and his wife had two children and were struggling to get by. He planned to use the refund he received from the EITC and CTC to pay down debt and cover some basic needs for the family.
VITA programs across the country harness the power of thousands of volunteers to deliver free tax preparation, asset building and financial education services to low- and moderate-income families. Our job at the National Community Tax Coalition is to support and strengthen VITA programs and the policies that help ensure low- and moderate-income families build a more secure financial future for themselves and their children. Our partnership with Opportunity Nation allows us to highlight the critical work being done by Community VITA programs by using the Opportunity Index indicators to show where progress is being made to advance opportunity, and where more work needs to be done.
As an example, let’s look at NCTC’s home state of Illinois. According to the Opportunity Index, while the 2013 median household income here was slightly above the national average – $51,606 vs. $48,958 – 15 percent of Illinoisans are still living in poverty and struggling to get by. NCTC’s network of Community VITA programs is working to combat that poverty rate. In 2013, Illinois VITA programs helped prepare more than 39,000 federal tax returns for hardworking families, which helped these taxpayers receive more than $19.4 million from the federal EITC and $8.2 million from the CTC. These VITA programs contributed to the 6.6 million families kept out of poverty each year by the EITC alone – nearly 300,000 in Illinois, about half of whom are children. We are constantly advocating to protect and strengthen these critical tax credits, as well as to improve VITA resources.
Similarly, NCTC’s work touches on educational and civic Index indicators as well. With a nationwide team of nearly 60,000 volunteers, these programs are working to increase community engagement and volunteerism rates. Our work in the college access arena has helped more than 9,400 students receive FAFSA assistance and follow-up services, helping to set them on the path to postsecondary success and to access any financial aid for which they qualify. Seventy-three percent of the students served in 2012 enrolled at least half-time in an institution of higher education. And, the students served in 2012 were eligible for nearly $23.5 million in financial aid, including $9.2 million in Pell grants and $7.8 million in state grants, enabling them to make acquiring a post-secondary degree a reality.
Altogether, NCTC and our membership are working together to advance the prospects of hardworking families trying to stay afloat. VITA programs enable them to build financial security, and eventually to get ahead. The Opportunity Index provides us with a helpful lens through which to examine our work and our impact, as we work to move those indicators in the right direction and promote better opportunities and advancement for all Americans.
The National Community Tax Coalition (NCTC) is the nation’s largest, most comprehensive membership organization for community-based organizations offering free tax and financial services to low-income working families. Our more than 2,800 members empower low-income workers to build a more secure financial future for themselves and their families through innovative financial services.