For millions of American families -- especially those headed by single women -- this tax season will offer hope, security and a potential reprieve from the crippling impact of the economy. This lifeline: the Earned Income Tax Credit (EITC).
The EITC is widely recognized as the largest and most effective anti-poverty program for low- to moderate-income working families, but the Treasury Department has estimated that up to one-quarter of low-wage workers fail to claim it.
EITC Awareness Day is a national effort held on January 27th to make families aware of the credit and to assist them in accessing services that will help them file and claim the credit.
Here in the DC metro region, Washington Area Women's Foundation has found the credit to be particularly advantageous for women-headed families. Last year, the Foundation awarded grants to several DC-area nonprofits that have programs focused on financial education and wealth creation. Nonprofits like Capital Area Asset Builders and Community Tax Aid were able to help 800 women file for more than $2.4 million in tax credits and refunds. The average amount of EITC received per participant was just over $2,000.
For women who are struggling to feed their families or who are stretching to make it to the next paycheck, an influx of $2,000 could change their lives and the lives of their children. Some of the women who have claimed the EITC through programs that The Women's Foundation has supported have used the credit to pay down their mortgages, finance their children's college education or save for the future.
Yana Hamilton, a single mother of three who works as a secretary at the Department of Agriculture, is one of those women whose family has benefitted from the EITC. After a tax preparer filed her 2008 return, Yana received a dreaded letter from the IRS. Mistakes had been made on the return and she had even missed out on receiving some of the credits for which she was eligible. Unsure of what to do after that, she skipped filing in 2009.
"I knew that would probably just make it worse, but I was nervous about getting things messed up again and I didn't know what to do or where to go," Yana said.
By the time she discovered one of the free tax sites that had been set up at a local community center to help families like hers, she had three years' worth of returns that needed to be amended or filed. Fortunately, the employees and volunteers at the tax site were able to get everything in order.
"At the tax [preparation] sites they work in teams so everything is double-checked and triple-checked," said Yana. "They totally took care of me and I really appreciate it. It isn't just that it's free -- it's a blessing in disguise."
Yana received the EITC last year and used it to improve her home, pay her bills and put some aside for her son who is going to college this year. She was also able to take her family on a short vacation last summer.
"It's hard being a single parent and the EITC really helps," Yana said. "With the economy the way it is now, it's good to let people and tax preparers know who's qualified. I know that there's going to come a time when I no longer need the EITC, but there will always be people who do."
Yana is why Washington Area Women's Foundation focuses on transforming our community by investing in women and girls. When we enable women to access resources, they re-invest them in their families and their communities. Despite the widening gap between the wealthy and the working poor, our fortunes and futures are tied to one another. Our communities become stronger and more resilient when all residents have the opportunity to achieve their full potential.
In the DC region, there are a number of tax preparation sites where qualified families can get free assistance filing their taxes. These sites are also looking for volunteers to help with filing. Be sure to check with nonprofits in your community for similar opportunities.