Iowa State University Extension

Problem:
Millions of Americans could receive valuable refunds during tax season, provided they file for a federal tax credit designed to assist low-income people. VITA (Volunteer Income Tax Assistance Program) a program that provides free tax preparation assistance can help them file for the full refunds they deserve.

Response:
The Earned Income Tax Credit, or EITC, is a federal tax benefit for working people whose incomes fall below an amount specified annually by the Internal Revenue Service (IRS). Eligible individuals must file federal and state tax returns in order to claim the credit, even if they are not otherwise required to do so because their incomes are low. Those who qualify for and claim the EITC can reduce their federal tax liability. When the credit exceeds the amount of taxes owed, it results in a tax refund. Despite this favorable information, studies find that up to 25 percent of eligible households fail to claim the credit. A lack of awareness of the EITC is one of the main reasons. Researchers have found that many families, especially those whose first language is not English, do not know the credit exists. Still other families are aware of the credit but do not know how to file for it. ISU Extension, as part of a financial education community coalition, participated in sponsoring two VITA sites for low income individuals in Black Hawk County for the third year in a row. The coalition focused on educating citizens about the EITC benefit, recruiting volunteer tax preparers and giving users of the assistance financial education.

Impact:
The Black Hawk County VITA sites reached over 250m Black Hawk County families with an average household income of $13,461. Of the 250 families who received free tax preparation services, 135 were eligible and received the Earned Income Tax Credit for a total of almost $210,000 coming into the Waterloo/Cedar Falls area in additional income for families.

Additional Team Members/Community Partners:
Operation Threshold, East Side Ministerial Alliance, US Bank Iowa Community Credit Union

Contact:
Madelyn Ridgeway
Black Hawk County Extension
3420 University Ave., Ste B
Waterloo, IA 50701
319-234-6811