By Rae Tamblyn, Research and Communications Analyst, NASCSP
It’s tax time! The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $53,000 or less, persons with disabilities, seniors, and limited English speaking taxpayers who need assistance in preparing their own tax returns. The Community Services Block Grant (CSBG) Network of Community Action Agencies (CAAs) serves over 15.7 million individuals, many of whom benefit from tax assistance services. Of the 6.7 million families served by the CSBG Network in 2013, 70.3 percent were living below 100 percent of the Federal Poverty Guideline (FPG), and the majority of families received some form of taxable income. CAAs served 2 million people with disabilities, 2 million seniors, and in fourteen states, 20 percent or more of the participants served in CAA programs self-identified as Hispanic or Latino. Nearly 50 percent of CAAs provide free tax assistance to their clients nationwide.
Want to know more about what the CSBG Network is doing nationwide right now?
The Volunteer Income Tax Assistance (VITA) service offered via Northwest Indiana Community Action, Indiana University Northwest School of Business and Economics and the Internal Revenue Service is featured in Northwest Indiana Business Quarterly Magazine. The VITA service offered via Community Action Partnership of Lancaster and Saunders Counties and University of Nebraska-Lincoln is featured in Strictly Business Magazine. A staff member from Action for Boston Community Development recently discussed their VITA and EITC tax programs on air with CBS Boston.
Tax Support is not new to Community Action…
The Community Action Partnership in the Minot Region of North Dakota served 118 individuals in 2013, their tenth year of providing the VITA program. Out of 118 clients served, 58 percent received either a federal or state tax credit for a total of $108,117. Southeastern Arizona Community Action Program (staff assisted clients in securing 187 tax returns, with a total federal refund of $ 1,113,245 and a total state refund of $821,465. In Illinois, CEFS Economic Opportunity Corporation (CEFS) partners with the Internal Revenue Service to provide VITA to their low-income and elderly clients. In 2013, CEFS prepared 1,672 tax returns for a total of $1,555,564 in refunds to customers. Many CAAs assist their clients through a range of asset and financial management programs, in addition to helping clients work through the income tax process and obtain refunds. Nationwide, the VITA program is often a step in a larger process of moving clients towards self-sufficiency.
The United Planning Organization (UPO) created a Community Re-investment Division specifically to focus on Asset Preservation and Development in the District of Columbia. One service offered by this division, provides access to free tax preparation through a partnership with the VITA program. This service also connects individuals with asset savings programs such as Individual Development Accounts (IDAs) and with workforce development programs. In 2013, the UPO’s newly created Community Re-investment Division assisted 938 customers to increase their human capital and physical capital asset base for moving out of toward self-sufficiency.
Southeastern Idaho Community Action administers a homeownership program that provides financial literacy education, an IDA program, and the VITA program to make a broad range of asset growth programs available to their customers. Clients who come to the agency for Volunteer Income Tax Assistance are pre-screened for all Southeastern Idaho Community Action Agency programs. Tax preparers are trained to identify potential candidates for IDAs. Assuming the clients’ goal for their Individual Development Account is to purchase a home, they are introduced to the homeownership program. This dual enrollment has demonstrated greater success for homeowners. The integrated approach helps clients work their way toward self-sufficiency through improved financial literacy and asset growth.
The Volunteer Income Tax Assistance Program at Gateway Community Action in Kentucky has six IRS-certified employees who provide free basic income tax return preparation with electronic filing to qualified individuals in local communities. Gateway can inform taxpayers about special tax credits or programs for which they may qualify such as Earned Income Tax Credit (EITC), Child Tax Credit, Individual Development Accounts, and Credit for the Elderly or the Disabled. Gateway VITA sites are conveniently located through the five-county service area at community and neighborhood centers and other central locations like libraries, schools and shopping malls. In 2013, Gateway completed 220 tax returns through the VITA Program, with 82 participants receiving an Earned Income Tax Credit (EITC) for a total of $108,549.
Honolulu Community Action Program (HCAP) participates in the VITA tax program to not only help their clients save money in the short run by offering free tax assistance, but also to enable participants to build long-term assets. In FY13, HCAP assisted 587 individuals and families to submit both Federal and State tax returns that claimed $1,082,801 in tax refunds, including $5,664,352 in EITC and $214,402 in Child Tax Credit. Clients can use tax credits to increase savings accounts, pay for higher education costs, or reduce their immediate financial burdens to move forward on their path to self-sufficiency.
CSBG provides core funding to these Community Action Agencies and hundreds more like them, working in counties all across America to reduce poverty, revitalize low-income communities, and to empower low-income families to become self-sufficient. Nationwide during FY13, 363,095 low-income families in CAA tax preparation programs qualified for federal or state tax credits for a total of $644,074,908 anticipated total tax credits. The VITA and other tax assistance programs aim to ensure that low-income families receive the best quality tax assistance and the full refunds they deserve. They are often a step in the process of empowering low-income individuals as they move towards self-sufficiency through financial education, asset building, and investment in continued education.
More examples of Community Action at work with tax support? Let us know in the comments!