Many District Dime readers are starting to receive their W-2’s and other tax forms in the mail, and that can only mean one thing ‘ it’s tax season. And while many of you probably dread this time of year, for many low-income working families in DC (and around the US) this can actually be a time of excited anticipation.
That’s largely due to the Earned Income Tax Credit (EITC) which helps boost the take-home pay of low- and moderate income workers, especially those with children. Low-income families in the DC metro area can find out if they qualify for this credit and get help preparing their taxes for free, starting January 29th, thanks to the DC EITC Campaign.
The EITC is a federal tax credit that was originally enacted to offset payroll taxes paid by low-income workers. Both the size of EITC benefits and the number of eligible households have been expanded in order to encourage and reward work, and reduce the income taxes on low-income working families. Many states, including the District, have also adopted their own state level credits.
The amount of EITC benefits vary depending on the person’s income, marital status and number of children. The EITC is a refundable tax credit, meaning that if the EITC benefit amount exceeds a family’s tax payment, they receive the remainder as refund. This can make a big difference for a low-income family. For example, a single DC parent with two kids who earned $20,000 last year would see their annual household income increased by 30 percent in 2011 solely from the EITC.
This is why the EITC is such a critical tool for poverty reduction. In fact, the EITC lifted nearly 6.6 million people nationwide out of poverty in 2009, and it is by far the most effective poverty reduction program for families with children.
I am a volunteer tax preparer with the DC EITC campaign, and that has allowed me to see what a difference the EITC can make for low-income working families. And because the campaign offers tax preparation assistance at no charge, it helps low-income families keep their hard earned money in their pockets. But it takes a lot of volunteers and outreach to ensure all the low-income families that need help, and are eligible for the EITC, can receive it. You can help by spreading the word or volunteering with the campaign. To learn more, please visit the campaign’s website.
