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By Qiana Torres Flores

The average tax refund of $2,803 represents an opportunity to pay bills, make those wish list purchases or even save for a rainy day. For many low-to-moderate income families, that check from the Internal Revenue Service is the largest lump sum they receive each year and efforts from both public and private sectors aim to help families keep more of their hard-earned money.

tax formMuch of the effort is centered around free tax preparation and raising awareness about the federal earned income tax credit (EITC), which reduces the amount of taxes low-to-moderate income working families owe and refunds the difference. At least 25 states provide their own EITC.

To bring more attention to local free tax prep opportunities for low-income families, and to invoke the spirit of Jerry McGuire, the Michigan General Assembly declared the last Saturday of every January to be “Show Me The Money Day” to coincide with National EITC Awareness day. Alabama passed a similar resolution recognizing the SaveNow WinLater program for taking tax time a step further by preparing returns for free and encouraging EITC recipients to save by entering them into a drawing to win a cash prize if they purchase a U.S. Savings Bond with their refund.

In 2013, at least two states appropriated funds to local EITC outreach campaigns and free tax prep opportunities. For instance, the Virginia General Assembly has helped fund the Creating Assets, Savings and Hope (CASH) Campaign in their efforts to offer free tax preparation for individuals eligible for the EITC. With 25 coalitions sprinkled across the state, the campaign prepared over 26,000 federal returns and over 24,000 state tax returns in 2013. This resulted in more than $34 million in federal refunds and over $12 million in federal EITC refunds. Families who used this service collectively saved $5.2 million in tax preparation fees. Last year the General Assembly appropriated another $185,725 to the campaign to continue their work.

The private sector and non-profits are also taking part in making sure individuals eligible for the EITC get free tax help.

  • The Annie E. Casey Foundation has supported efforts to get the word out about EITC and free tax prep opportunities since 2003.  For instance, the foundation supports the National Community Tax Coalition.  The coalition provides quality training for volunteer tax preparers associated with community-based organizations that offer free tax prep services to working families.     
  • The Intuit Tax Freedom Project and 13 other on-line tax software companies have teamed up  with the IRS to help low and middle-income individuals file their taxes electronically for free since 2003. Together they have saved eligible tax filers and the IRS hundreds of millions of dollars by making it easy to e-file with products like Intuit’s TurboTax Freedom Edition. 
  • The AARP Foundation Tax-Aide Assistance program operates in more than 5,000 sites to prepare returns at no cost, with special attention to adults over 60 nationwide.
  • This year Citi will work with local organizations to distribute their in 9 states and the District of Columbia.  The brochures explain how to claim the EITC, list Volunteer Income Tax Assistance (VITA) sites that offer free tax preparation services to individuals eligible for the EITC and encourages readers to save for the future. 

The IRS started collecting returns on Jan. 31 and, as usual, the drop-dead-deadline is Tax Day—Tuesday, April 15.  

To learn more about state and federal EITCs, click here.
 

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About the NCSL Blog

This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.

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