It’s the busy season for us at Capital Area Asset Builders (CAAB); we’re gearing up for tax season. But while taxes can fill many with dread, CAAB is grateful for tax credits that help working families in DC, like the Earned Income Tax Credit (EITC).
The EITC can significantly augment the income of a working individual or family. Both the federal government and DC offer an EITC, with the result that a single mother of two earning $15,000 can receive more than $6,000 in combined EITC benefits. Studies have shown that the EITC has helped many single parents leave welfare for work, and that the EITC lifts more children out of poverty than any other single federal program. The EITC also stimulates the local economy. A recent study showed that each dollar received from the EITC creates a further $1.58 in local economic activity, as families spend tax refunds locally on food, clothes, and other family needs.
CAAB leads the DC EITC Campaign to promote the EITC and other tax benefits. The campaign also provides free tax assistance to low-income residents, and connects those residents with financial education and other financial services that are available throughout the year. Last year, the DC EITC Campaign filed over 5,000 returns for low-income DC residents.
One client came to our Jubilee Jobs tax site last year to get her taxes done. Her husband had come to us the previous month and now she wanted to file herself. The couple was married but had never filed together. A tax preparer completed her return and then added their refunds together to show the couple their total – $2,300. With the client’s permission, the tax preparer found that if the couple would file jointly, they would be eligible for the EITC and for college-related education credits as well. Their new refund was over $4,600!
At CAAB we know how vital that extra $2,300 can be for working families in DC. We are thankful for the credits that supplement the income of low-wage workers, lower the taxes of low- and moderate-income families and help reduce poverty.
NOTE FROM DCFPI:
We are thankful for the DC EITC and are concerned that DC’s recession-fueled crisis could put it at risk. In fact, the DC EITC was on a list of budget cuts earlier this year, and it was saved only with vigorous advocacy.
The need to protecting the EITC is one reason that the DC Fiscal Policy Institute urges the Council to take a balanced approach, to DC’s $188 million budget shortfall, including new revenues. We support a plan to raise the income tax 1 percentage point for DC residents who earn more than $200,000 a year.
If you care about this issue, send an email to Chairman Gray today.
