With the end of tax season right around the corner, Ohio Enterprisers Kathy Matthews, Amy Eiben, and Antoinette Teasley are making one last push to connect as many families and individuals to free tax services as possible. Enterprise leads the Cuyahoga Earned Income Tax Credit (EITC) Coalition, which is part of the IRS Volunteer Income Tax Assistance program. In Cuyahoga County, the Coalition is focused on helping families leverage the Earned Income Tax Credit, the largest, most effective relief program in the country designed to supplement the income of people who are struggling to make ends meet.
Over the past tax season, the EITC Coalition helped nearly 10,000 clients secure a combined $13 million in refunds, and the goal is to surpass that number this year. Approximately 25-30% of clients served claimed the EITC and 15% claimed the Child Tax Credit. We sat down with the team to discuss the importance of the program in Ohio and how it supports Enterprise’s goal to build resilience and upward mobility.
What is the Earned Income Tax Credit, and why is it important?
The Earned Income Tax Credit (EITC) is one of the most effective federal anti-poverty programs for working-age households providing additional income and boosting employment for low-income workers.
It is a refundable tax credit and boosts the incomes of low-wage workers while offsetting federal payroll and income taxes.
How effective has the EITC Coalition been in putting dollars back in the pockets of low-income families?
In the 2020 tax year (the latest year for which these IRS data are available), 25 million working families and individuals across the country received the EITC and the average EITC was $3,099 for a family with children.
Who qualifies for the program?
When filing taxes for 2023 (due in April 2024), working families with children that have annual incomes below ~$46,600 to $63,400 (depending on marital status and number of dependent children) may be eligible for the federal EITC.
Working adults who aren’t raising children at home and had incomes below $17,640 if they are unmarried ($24,210 for a married couple) in 2023 can receive a very small EITC.
How does this work relate to Enterprise’s larger mission to make home and community places of pride, power and belonging?
The EITC provides critical relief to households burdened by severe housing costs. We know that as rents continue to rise, wages have simply not kept pace. Housing affordability in the United States has declined over the last 15 years, making economic opportunity programs such as the EITC critical in improving the housing stability of low-income households.
Over the years, expansion of the EITC has been linked to improved housing outcomes for single mothers and their children. Research has shown that the EITC helps make housing more affordable by reducing housing cost burdens, reduces doubling up, and increases the likelihood that a single mother can move into a home with her name on the lease or mortgage. Renting or owning a home rather than living with someone else leads to more stable housing which is generally better for children because studies show that frequent moves, which are more common when people live with others, are linked with poorer school outcomes. Moreover, because mothers are no longer doubled up, they are less likely to live in a crowded household, which is also better for children.
In addition to the positive impact on housing, the EITC provides the following benefits:
- It promotes work and fuels the economy. The EITC increases workforce participation and encourages low-wage workers to get additional education or training to boost their employability and earning power. For every EITC dollar a recipient earns, they return $1.50-$2 to the local economy supporting not only their families but also their communities.
- It expands economic security. Workers mainly use their tax credit to pay for necessities like rent, utilities, groceries, transportation, and medical expenses. The tax refund can also help workers build savings and establish financial stability.
- It increases children’s educational performance and attainment. Children in families receiving the EITC score higher on tests and are likelier to graduate from high school, enroll in college, and earn more when they enter the workforce.
- It improves health outcomes. Working mothers with two or more children whose incomes increase under EITC report better overall physical and mental health. Expectant mothers with increased EITCs are likelier to receive prenatal care and less likely to give birth to premature or low- birth- weight infants.
When a family accesses their hard-earned EITC benefit, our communities experience a two, three, or even four-fold return. Despite this obvious benefit, it is estimated that 20% of low-income workers eligible for the EITC do not claim it. We know how difficult it is for low-income working families to have consistent wage progression in their careers. Families not only often find themselves in low-wage jobs with no near-term chance of wage increases but also face the additional challenges of quality and affordable child-care, long-distance travel to the job and lack of sick-time and benefits. For many, the EITC payment becomes an essential, one-time annual pay increase that cannot be afforded to be left on the table.
Learn more about the Cuyahoga EITC Coalition at refundohio.org.