by Shailana Dunn Wall
The Earned Income Tax Credit, or EITC, doesn’t sound like a particularly interesting topic to most people, but it’s something everyone working in the public interest field should know about. EITC is a refundable tax credit, meaning that if it exceeds the amount of tax owed, the taxpayer gets a check for the rest of the credit. It is available to low-income, working taxpayers between the ages of 26 and 64. The amount of the credit varies based on the wages earned by the taxpayer and the size of their family (for example, a single parent with minor children would be eligible for a larger tax credit than someone who is only supporting themselves).
Since nearly all taxpayers file their taxes through some type of computer program like TurboTax, many EITC recipients are unaware that the refund they receive is a result of this credit. That said, with credits potentially exceeding $6,000 for families with 3 or more minor children, the credit can be hugely impactful for families in need.[1] Unfortunately, not everyone who is eligible for EITC files their tax returns. Annually, around 20-25% of potentially eligible taxpayers do not file tax returns.[2] Since individuals with very low incomes are not legally required to file tax returns, many choose not to do so and, as a result, lose out on this important benefit.[3] The IRS does try to reach out to these people through the mail, but since there are few things scarier than a letter from the IRS, this hasn’t done a lot to increase EITC uptake.
Public interest lawyers are already working with many individuals with low income and can help educate them about the importance of filing tax returns. There’s a benefit for nonprofits as well: when the people they are serving have higher incomes, the nonprofits may be able to stretch their small budget a little further and help more people.
This doesn’t mean that we all need to learn tax law, or even do math – I know that’s something a lot of lawyers have nightmares about. The IRS has a handy checklist that can be used to determine EITC eligibility, which can help public interest professionals communicate the guidelines to their constituency. There’s even an online quiz individuals can take to determine eligibility (available in English and Spanish). The simple act of increasing awareness can be incredibly impactful for families in need.
Shailana Dunn-Wall will receive her JD from the University of Nebraska College of Law in December 2019. She has completed programs of concentrated study in Tax and Alternative Dispute Resolution.