Thursday, October 15, 2009

The Role of VITA in the Community

October is not a month that we often associate with tax returns. With refunds long since spent and months to go until this year’s W-2s start arriving, we would forgive VITA programs across the country if they wanted to use October to take a break. Nonetheless, the National Community Tax Coalition (NCTC) has chosen to make October a time of action for these VITA programs. The NCTC has encouraged VITA programs and other organizations that support VITA to make October 21st, 2009 a national Day of Action.

VITA, or Volunteer Income Tax Assistance, is a program sponsored by the IRS to help low- and middle-income people file their income tax returns. Through the program, community partners engage and train volunteers and set up sites where clients can come to have their basic returns completed.

VITA was created especially to promote the Earned Income Tax Credit (EITC), a refundable credit that means big returns for working LMI filers. According to a 2007 study by the Brookings Institute, more than one in six taxpayers nationwide received the EITC in 2004. In the past, the EITC has gotten strong bipartisan backing, but with the current economic climate, that support is not guaranteed.

Yet the EITC can be the most money that filers will see in a check all year – this table shows how much they can expect to receive. For instance, the federal poverty level for a married couple with two children is currently $22,050. The family earning that amount in 2008 would have received $4,120 in EITC this tax season, which is nearly 20% of their yearly income.

Many families look to these large refunds to pay for essential services and to begin saving or building assets for the future. VITA programs encourage filers to spend this money on asset-building expenditures and advancements in school, both of which enhance economic security and promote economic opportunity.

In addition to the federal EITC, 23 states and the District of Columbia (though not Pennsylvania) offer a state version of the program. According to this toolkit prepared by the NCTC, most states report additional administrative costs of less than one percent.

NCTC invites VITA advocates to Washington, D.C. for the 21st to support the federal EITC and other issues relevant to the VITA program. Here is a planned schedule of events for the day:
  • Kick-off breakfast with Congressional staffers on the Hill
  • Meetings with Congressional Members and Committee staffers
  • Forum on the regulation of paid-preparers
  • Evening Reception
NCTC also has information available for learning more about the EITC and the Day of Action on their website.

--Greg Potestio

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