Earned Income Tax Credit (EITC)


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Basic presentation slides to be distributed to NAACP units in 36 state conferences. Units may customize the slides to fit their needs.

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  • Introduce NAACP’s objectivesExplain the importance of promoting EITC through the campaign (see Understanding the Issue)
  • Provide a brief background on EITC:The Federal government created EITC in 1975 as a financial assistance program. It then became the largest and most effective anti-poverty tool.
  • EITC increases with the number of qualifying children to compensate for the extra care and spending of each additional child.
  • -Explain the negative consequences of RAL and predatory loans- RAL are high-cost short term loans made against one’s refund-Since 2013, US banks discontinued RALs-Smaller banks and sketchy lenders still offer RAL products charging high APR (over 100%)-Often times consumers miscalculate how much they will get back in refund, so they may borrow more than they could pay back with their refund-Over 60% of RAL consumers receive EITC – need to encourage people to claim EITC early, so they won’t resort to RALs-For more information on RAL: http://www.creditcards.com/credit-card-news/the-end-of-refund-anticipation-loans-1282.php
  • - You, your spouse (if filing a joint return), and qualifying child must each have a valid SSN
  • Examples of non-earned income (if asked):-Pay received for work while an inmate in a penal institution-Interest and dividends-Retirement income-Social security-Unemployment benefits,-Alimony-Child support
  • Head of Household and Qualifying Widow(er) have the same income limits as a Single filer
  • Under age 19 at the end of the tax yearUnder age 24 at the end of the tax year, etc.
  • -Address common misconception that EITC only benefits individuals and families with children
  • If you were paid in cash, you MUST report the amount in your income- Also consult with your tax preparer and double check the information on your tax return
  • You, your spouse (if filing a joint return), and qualifying child must have a SSN card.Remind audience that tax preparers take Due Diligence in verifying taxpayer’s identification Always make sure to have proof of identification and SSN card- SSN card must be VALID FOR WORKPassports can be from any country
  • W-2 Form: Wage and Tax Statement is the most common tax form- Show this slide so the audience is familiar with it
  • - If you have any of the following, you must also provide documentation.
  • IRS created the VITA program to assist low-and medium-income familyAssure the audience that the IRS has a humane faceUnited Way can connect you to local VITA sites and volunteers
  • End the presentation with a critical question: Once I receive my refund, how should I use it? To expand from our previous slide (“How does EITC benefit me?”), we want to suggest ways in which you can build wealth from EITC.
  • Ask audience to recall ways that EITC can benefit them (from previous slide)Emphasize the fact that wealth-building methods must be customized to each individual’s and family’s needs. What works for one family may not work for another.-Warn the audience not spend the refund wastefully, but consider their own needs first.
  • Provide your organization’s contact information Include local VITA’s contact information While you show this slide, take the opportunity for Q&A or closing activities (See “Preparing for Your Event”)
  • Earned Income Tax Credit (EITC)

    1. 1. Earned Income Tax Credit NAACP Economic Department 1816 12th Street NW Washington, DC 20009 (202) 478-6400
    2. 2. What is EITC? • A refundable tax credit for low-and moderateincome individuals and families • Your income can come from  Working for someone else, or  Owning or operating a business
    3. 3. The amount of EITC you can receive depends on  Your filing status  Income  Number of qualifying children
    4. 4. You may receive anywhere from $2 to $5,891 EITC Range $2 to $475 Number of Qualifying Children 0 $9 to $3,169 1 $10 to $5,236 2 $11 to $5,891 3
    5. 5. How does EITC benefit me? • Provides short-term safety net EITC reduces your tax liability (if any), so you can  Invest in your children’s health and education  Improve your financial stability  Become less reliant on welfare assistance  Be motivated to work more or seek employment
    6. 6. • Reduces the need and use of refund anticipation loans (RAL) and predatory loans • Strengthen the economy with increased employment rate and spending money • Fast, easy, and FREE to claim EITC
    7. 7. Am I eligible for EITC? Three requirements: 1. Filing Status 2. Income 3. Qualifying Child
    8. 8. 1. Filing Status • CANNOT file married filing separately • Have a valid Social Security Number • For a nonresident alien: 1. Married to a U.S. citizen or a resident alien 2. File a joint return
    9. 9. 2. Income • Must work and receive earned income • Investment income CANNOT exceed $3,200 • CANNOT file for Foreign Earned Income (Form 2555 or 2555-EZ)
    10. 10. Your earned income can be from • Wages, salaries, tips, and other taxable employee pay • Union strike benefits • Long-term disability benefits received prior to minimum retirement age • Net earnings from self-employment
    11. 11. Your total earned income must be less than Filing Status $13,980 1 $36,920 2 $41,952 3 $45,060 0 $19,190 1 Married Filing Jointly Income Limit 0 Single Number of Qualifying Children $42,130 2 $47,162 3 $50,270
    12. 12. 3. Qualifying Child • If you have a qualifying child, he/she must satisfy all the following: 1. 2. 3. 4. Relationship Test Age Test Joint Return Test Residency Test • You CANNOT be a qualifying child of another person
    13. 13. 1. Relationship Test • Son, daughter, stepchild, foster child, sibling, half-sibling, step-sibling, or • A descent of any of them
    14. 14. 2. Age Test Younger than you, or your spouse (if filing a joint return), and • Under age 19, or • Under age 24 AND a full-time student, or • Any age if permanently and totally disabled at any time during the year
    15. 15. 3. Joint Return Test • The child CANNOT file a joint return for 2013
    16. 16. 4. Residency Test • Live with you, or your spouse (if filing a joint return) for more than 6 months in the United States in 2013
    17. 17. If you do not have a qualifying child, you must: • Be at least age 25 but under 65 at the end of the tax year • Live in the United States for more than 6 months • Not qualify as a dependent of another person
    18. 18. How do I claim EITC? • File a federal tax return even if you are not required to file or have any tax liability.
    19. 19. If you are eligible but do not receive EITC • There may be an error in filing your tax return  Incorrect SSN  Misspelling of names  Claiming a child that does not meet all four tests for Qualifying Child  Over- or under-reporting income amount  Filing status is single or head of household when married
    20. 20. What do I need to claim EITC? All documents that are required to file a tax return: • Proof of identification (photo ID, passport) • Social Security Cards • Wage and earning statement(s) from all employers (Form W-2, W-2G, 1099-R, 1099-Misc)
    21. 21. Most common tax form
    22. 22. Other documents • Interest and dividend statements from your banks (Form 1099) • Proof of bank routing numbers and account numbers for Direct Deposit (a void check) • A copy of last year’s federal and state returns (if available)
    23. 23. Who can assist me with EITC? • Volunteer Income Tax Assistance (VITA) – Free tax preparation for taxpayers who make $51,000 or less – Contact 1-800-906-9887 to find the nearest VITA site • Internal Revenue Service – For more specific information – Contact online http://www.irs.gov/eitc • United Way – Existing partnership with VITA – Contact local offices for VITA sites information http://apps.unitedway.org
    24. 24. How can EITC help me build wealth? • Pay off your credit card(s) • Add to your saving account(s) • Save for your child’s college education
    25. 25. More wealth-building tips • Buy textbooks for your children • Make home or car repairs • Reduce your monthly bills (eg. Utility, mortgages, school loans) • Pay for doctor and dental visits • Make a down payment for your car/home What else?
    26. 26. Contact Information
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