Tax Preparation Initiatives and the Earned Income Tax Credit

Help for struggling families, an economic stimulus for hard-hit communities, and a rewarding opportunity for volunteers

How did $125,000 from Bank of America become $5.8 million that directly helps low-income working families while stimulating the most economically devastated communities in Massachusetts?

The answer: Free income tax preparation services focused on filing for the federal Earned Income Tax Credit (EITC). Thanks to a $125,000 grant from Bank of America, WalMart Foundation, the IRS, agency partners, and an army of committed volunteers, 3,513 low-income taxpayers filed for $5.8 million in tax refunds, including $2.1 million in EITC.  These results represent a 29% increase from last year.  In 2011, United Way invested in seven free tax sites in Lawrence, Lynn, Chelsea, Revere, Quincy, Boston, and, for the first time, Waltham.  In addition, this year, tax preparers had the opportunity to directly purchase U.S. Savings Bonds with a portion of their refunds via the tax preparation itself.  Most often, these savings bonds are a good first step to savings - without fees and risk - often for a child's future education.

Called one of the largest anti-poverty tools working in the United States, EITC can mean up to $5,751 for eligible taxpayers. This is money that families can use to reduce debt, build savings, pay for education and training or simply to make ends meet. Often, taxpayers are unaware of EITC or are concerned about the costs associated with seeking help filing for it. In the 2008 tax year, an estimate of more than 50,000 working families in Massachusetts failed to apply, leaving more than $75 million unclaimed.  For the seven communities above, together, an estimated $20 million in EITC credits  were unclaimed.

United Way is one of many partners across the Commonwealth involved in a statewide EITC outreach and education campaign that increases awareness among low-income taxpayers.  In addition, United Way recruits volunteer tax preparers across our footprint and, in partnership with the Boston EITC Coalition, hosts volunteer trainings.

The EITC awareness and tax filing effort is part of United Way's larger strategy to improve financial stability, particularly for families, through investments in basic needs, housing, employment training, financial education and asset-building opportunities.

To learn more about EITC, follow the links to the right.