Earned Income Tax Credit (EITC)

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Earned Income Tax Credit (EITC)
Presented by Tempe Councilmember Dennis Cahill,
Chair Human Services Coordinating
Committee Nichole Ayoola, City of Mesa Kate
Hanley, Tempe Community Council Wayne Tormala,
City of Phoenix
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What is the Earned Income Tax Credit?

• Refundable tax credit for low-income working
  individuals and families
• Can be claimed if the individual does not owe any
  tax at all
• Up to 4,204 can be received for 2003
• A first-time applicant can apply for 2001, 2002,
  and 2003 potential for total return of
  approximately 10,000

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Who qualifies for EITC?

• Low-income workers must have earned income
• Ages 25-64 (21 if children in household)
• Single or married, with or without children
• Requires a valid social security number
• Non-citizen workers with Individual Taxpayer
  Identification Numbers (ITIN) are not eligible
  for E.I.T.C. but can receive Child Tax Credits

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Whats in it for us?
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Why is EITC a Win-Win situation?
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Mesa

• Whats in it for Mesa residents?
• Returns cash to hardworking individuals and
  families
• Allows dialogue about financial literacy
  and encourages savings and asset building
• Whats in it for the City of Mesa?
• Method to assist low-income working families gain
  education
• Brings much-needed sales tax back to the City at
  a time of declining resources

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More About Mesa

• 260,057 in EITC funds returned to Mesa residents
  who used VITA sites (tax year 2002)
• Over a half million dollars in total refunds
  (EITC and other refunds) returned to Mesa
  residents who filed with the assistance of VITA
  sites in Mesa

• 548 Mesa families received free tax assistance
  through VITA sites

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Tempe

• Tax Year 2002 statistics

• 340,323 returned to Guadalupe Tempe residents
  who used VITA and TCE sites
• 443 returns filed at VITA sites (not all
  qualified for EITC)

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More About Tempe

• Needed a strong City leadership role
• The City of Tempe did all of the following
• Recruited volunteers from City staff
• Allowed volunteer time for City employees
• Recognized volunteers
• Provided space, hardware, and technical help

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Phoenix

• Impact
• 35,000 workers are not receiving the financial
  boost
• 25-64 million of unclaimed EITC
• EITC campaign involves
• Public awareness
• Asset building education
• Targeted communities

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Who Benefits?

Businesses
Working Poor
EITC
Banks
Local State Government
Employers
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Revenue to your communities

• Tax credit dollars help residents
• Pay monthly bills
• Purchase major items
• Automobiles
• Homes
• Pay tuition for themselves their families

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What resources are necessary to develop a VITA
site?

• Early public awareness/community mobilization
• Computers
• Volunteers
• (IRS handles the tax training)

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How can a city help market EITC?

• Inform employees about importance of EITC by
  placing inserts or notices in paycheck envelopes
• Reach out to
• Chambers of commerce
• Workers without children
• Non-English speaking communities
• Market the program locally through cable
  television, schools, municipal newsletters, civic
  organization newsletters

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Timeline Targets for EITC

• December
• -Flyers in employee paychecks
• -Volunteer recruitment
• January/February
• -Train recruited volunteers
• -Locate easy access facility for tax preparation

• February
• -Volunteers begin tax preparation
• -Heavy marketing through local groups

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• The IRS is prepared to partner with any of the
  municipalities. A special thanks to the
  following people for being present today and
  available for questions
• IRS Mary Burke, Sharon Taylor-Ward
• To find out who the IRS contact is for your
  community, contact Patrick Reidy, territory
  manager, at 602-207-8684.
• People from various municipalities are also
  willing to talk to you about their EITC
  experiences
• Nichole Ayoola, City of Mesa
• Kate Hanley, Tempe Community Council
• Wayne Tormala, City of Phoenix