Many of us will wait until April 18 to file our tax returns, either because we know we owe money and are trying to delay the inevitable, or because we just don’t want to kill our 2016 buzz anytime soon. Others, however, have already filed their returns, submitting them to the IRS before the ink was even dry on their W-2s. While some of these folks might just be early-bird go-getters who take pride in immediately fulfilling their responsibilities, others file their taxes in January strictly out of necessity. For them, the sooner their tax returns are accepted, the sooner they’ll receive a hefty refund that could supplement their incomes for the rest of the year. This financial windfall is usually courtesy of the Earned Income Tax Credit.
The Earned Income Tax Credit (EITC) is a refundable credit that can be claimed by taxpayers who receive income in the form of employment compensation or as net earnings from self-employment.
EITC initially offered a modest $400 to low-wage earners with children; however, it has been expanded multiple times with a maximum payout of over $6,200 in 2016. It has become widely regarded as the nation’s most successful anti-poverty program since its inception in 1975. What’s more, the credit’s reach has grown beyond the working poor to also benefit middle-income households.
In December 2015, key provisions of EITC were made permanent by Congress in the Protecting Americans from Tax Hikes (PATH) Act of 2015. This new law ensures that EITC will continue its mission of providing support to hard-working families with children. United Way of Greater Cleveland was a vocal supporter of PATH, knowing first-hand the positive impact EITC has on taxpayers from its participation in two local tax preparation programs.
One program is MyFreeTaxes, a website powered by H&R Block that allows users to file both their federal and state returns at no cost if their household income is $62,000 or less. The site is very user-friendly, so even people who have never done their own taxes can get through the process easily. MyFreeTaxes is funded by the Walmart Foundation and is a United Way Worldwide program, which also provides assistance to website users via a toll-free helpline. To get started, taxpayers can go to www.MyFreeTaxes.com and click the button titled “FILE FOR FREE.”
United Way of Greater Cleveland is also a member of the Cuyahoga County Earned Income Credit Coalition, a program that provides in-person tax preparation for individuals and families making less than $54,000. Services are provided at 20 sites conveniently located throughout the county, with varying hours of operation. Last tax season, the coalition served over 12,000 clients, bringing $14.8 million in tax refunds back into the community.
Unfortunately, the IRS estimates one in five taxpayers who qualify for EITC don’t claim it because they aren’t aware of it. To help address this issue, the IRS partners with community organizations, like United Way, to promote EITC Awareness Day that happens to be today January 29, 2016.
If you or someone you know qualifies for any of the EITC programs or you’d like more information about free tax preparation options in Cuyahoga County or other counties in Northeast Ohio, please dial 2-1-1 for assistance. United Way’s 2-1-1 Information and Referral Specialists are available 24 hours a day, every day (including April 18th).