April 8, 2021
Did you know that one of the biggest and most successful poverty-fighting programs happens at tax time? The Earned Income Tax Credit, (EITC for short), is one way our federal government rewards work and encourages hardworking families—already crunched for time—to file their taxes and get cash in their hands.
The American Rescue Plan Act of 2021 that was passed in March and signed into law by President Biden provides a temporary expansion of the EITC to put more money in the hands of struggling individuals and families. For the first time, workers under age 25 can qualify even if they don’t have kids. And households with children will benefit from a temporary boost to another deduction, the Child Tax Credit (CTC), which is expected to cut childhood poverty in half.
For the past 18 years, United Way Bay Area (UWBA) has run one of the largest and most successful free tax programs in the country through Earn It! Keep It! Save It! (EKS) and our coalition of partners. Each year, we recruit and train approximately 2,000 volunteers to work at 200 locations in eight Bay Area Counties, preparing free tax returns to low- and moderate-income households.
Even before the pandemic, which put so many people out of work, EKS put thousands of dollars back into the pockets of our region’s most vulnerable. In 2018, for example, the average Earned Income Tax Credit was about $2,500, ranging from $519 for single filers to $6,431 for families with three or more children.
That kind of money is crucial for working families to help cover the cost of food and housing, build an emergency fund, or save for college. Without it, more kids would go hungry.
United Way has been a strong advocate of the EITC, lobbying members of congress to keep and expand this important program. We also work hard to ensure that qualifying individuals receive every dollar of benefits they deserve.
When it comes to helping people access tax-administered social benefits like the EITC, our free tax program is working. According to a recent study, policies that increase filing can also increase the uptake of such benefits.
Each year nationally, a stunning $7 billion in benefits is left on the table. We want to make sure that kind of thing doesn’t happen in the Bay Area. This year, UWBA is working overtime to ramp up for tax season, and more people than ever will be turning to us for help. At a time when so many of our neighbors have been impacted by job loss or a reduction in hours, the new EITC will bring a welcome sigh of relief.
If you have any questions about the program, or are interested in volunteer opportunities or the free services we provide, please visit Free Tax Help resources page.