Tax Season: Our Favorite Time of Year for So Many Reasons!
By Jim Horan, CEO
This week marked the end of tax season—our favorite time of year at CAHS! Tax time is a boon for low-income working families who receive the federal and state Earned Income Tax Credits (EITCs). This year, about 225,000 Connecticut households will receive a federal EITC averaging over $2,000. Most of these filers also will receive a state EITC averaging over $550. That’s big money for households earning about $20,000 a year on average.
We also love this time of year because CAHS coordinates the state’s largest Volunteer Income Tax Assistance (VITA) program, and it’s a beautiful thing to help put money in the pockets of hard-working people who really need it. This year, CAHS worked with 41 free tax preparation sites in five counties, with most sites concentrated in larger cities with many low-income children and families. VITA sites are located at trusted community-based organizations, including TVCCA in New London and CAANH in New Haven; New Haven Public, Ferguson (Stamford) and other libraries; houses of worship like Calvary Christian Temple in Bridgeport; community centers; community colleges; and more.
This year, CAHS’s VITA coalitions filed more than 13,000 tax returns—a record! Final numbers are not yet in, but federal refunds will exceed $20,000,000, including almost $7,000,000 for the federal EITC. The state EITC that a CAHS-led coalition helped pass in 2011 (thanks to so many of you!) increases tax-time benefits.
Part of the reason CAHS loves VITA and the EITC is that everybody wins: tax filers who save an average of $200 compared to going to a paid tax preparer, more than 400 IRS-trained volunteers who never tire of seeing the smiles (and sometimes tears) of filers when they learn the size of their refunds, and the partner agencies that include not only the 41 VITA sites, but numerous others. These include businesses and colleges that provide volunteers, United Ways that provide critical marketing and financial support, and IRS staff that provides training, troubleshooting, and much more.
VITA and the EITC also benefit local communities, because tax refunds are generally spent quickly and locally, with a multiplier effect. Of course, some VITA filers save funds (including about 9% of filers at our sites last year who used the Saver’s Credit. CAHS and our partners would like to encourage more saving and asset-building, attending our Connecticut Money School classes, participating in one-on-one financial coaching, and more. VITA can be the gateway to true financial empowerment!
CAHS could not do this without our funders, including the United Ways of Coastal Fairfield County, Greater New Haven, Greater Waterbury, and Western Connecticut; banks and their foundations, including Wells Fargo, Bank of America trusts, Citi, Ion, Liberty, People’s, Signature (plus GE Asset Management); and foundations including American Savings, Connecticut Community, Community Foundation of Greater New Haven, The Inner-city Foundation for Charity & Education, and Near & Far Aid.
Want to get involved, as a site, volunteer, or supporter? Contact CAHS VITA Coordinator Extraordinaire, Lucille Vaughan, at email@example.com.
Integrating VITA with Asset-Building and Other Services
Marilyn Ondrasik, Interim Program Director
CAHS continues to move closer to an integrated system for its family economic success work. Financial education and building financial capability provide the foundation for family economic success. Recently, five VITA partner sites in Fairfield County enthusiastically embraced reaching out to the people who come for income tax assistance to let them know about the next step, a workshop that will help them stretch their money to meet their needs.
This money and budget workshop helps low and moderate income people learn how to budget, start to pay down debt and set aside money for emergencies or special purchases. Our Connecticut Money School workshops have been going well and are in strong demand. Recent workshops have been held at United Way of Central CT, Waterbury’s Home of Hope, Bristol Housing Authority, Derby’s TEAM, Naugatuck Valley Community College, West Haven Public Library, East Hartford Library, Capital Region Education Council (CREC), Wilson Senior Center in Windsor, Farrell Treatment Center in New Britain, South Norwalk Community Center and Norwalk Housing Authority. And that’s just for March and April. Upcoming workshops will be at TEAM in Derby, East Hartford Library, Wilson Senior Center, Enfield Senior Center, and the Town of Branford.
Youth Money School, as CAHS’s most recent start-up financial program, has conducted recent workshops at Hartford High School, Bulkeley High School and Guilford Library, with upcoming workshops scheduled at Norwalk Housing Authority and a repeat appearance at Guilford Library. We are signing up more and more of these workshop participants for our financial coaching. This continuum of services is designed to provide maximum support for families. Our goal is to provide families with the knowledge and financial skills to set them on a path to financial stability and economic self-sufficiency.
To sign up for classes through CT Money School, visit ctmoney.org.
For more information or questions, please contact Barbara Steadman, CMS Volunteer Coordinator, at firstname.lastname@example.org or Esther Jean Marie, VISTA (Youth Money School) at email@example.com.
Norwalk VITA Volunteers Help File More Returns This Year
Lucille Vaughn, VITA Program Director
Last fall, the Internal Revenue Service (IRS) reached out to CAHS to open an additional Norwalk VITA site in anticipation of the closing of two free tax sites for the elderly. Thanks to an amazing group of volunteer preparers led by Pat Gentile and veteran site coordinator Helen McKee, CAHS was able to open a third free tax preparation site at the South Norwalk Community Center.
As of April 17, this site e-filed 936 federal tax returns—the second largest of the 41 VITA sites CAHS coordinates, after New Haven Public Library. The existing Norwalk sites stepped up their efforts to help with the influx of filers by adding additional hours and volunteers. Norwalk Community College (NCC) e-filed 621 tax returns and Family & Children’s Agency e-filed 67 tax returns as of April 17.
This year, 50 trained VITA volunteers in Norwalk filed 1,492 tax returns – an increase of over 1,000 returns from the previous year. The filings thus far returned $2,110,373 in federal refunds to local families, including $609,323 in federal Earned Income Tax Credits (EITC), which may have otherwise gone unclaimed. This tax credit helps low-income working families with children have more money for monthly bills, pay off debt and to save for emergencies.
Professor Tony Scott is the site coordinator at NCC who, with the assistance of his 20 volunteers, increased the number of filers served from 300 returns at this time last year to almost double the number of returns. Professor Scott has been a CPA for 42 years and has been operating this VITA site for the past seven years.
Recently, Tony related a story about why VITA is worth the countless hours he volunteers.
“A couple who came to the tax site in April made my day. I looked outside and there was an older couple and another man, who turned out to be their 59 year old son who brought them. As I reviewed their paperwork and their ID licenses, I stopped in my tracks. Mr. Massaro is 95 and Mrs. Massaro just celebrated her 93 birthday!! Mr. Massaro is from the Greatest Generation, those who saved the world from tyranny and oppression, and is a WWII veteran, who was a medical nurse on a ship just off the beach on D-Day. I felt so honored to just be in their presence. Mr. and Mrs. Massaro were truly appreciative of the service and did not complain about the wait to get seen. It just takes one client like Mr. and Mrs. Massaro to make our day, to make VITA all worth it, and to make us look forward to, and thankful for, another day.”
EITC in Connecticut: Reducing Poverty, Bringing People to the Workforce
Roger Senserrich, Policy Director
The Earned Income Tax Credit is one of the most powerful poverty reduction tools in Connecticut. It has many of the features than an effective anti-poverty program must have: it targets low-income families effectively, it creates a powerful incentive to join the labor force, provides a clear cut, easy to understand benefit (actual money) and it has a wide coverage, as pretty much everyone has to fill their taxes.
In 2012 close to 210,000 households in Connecticut received the federal EITC, getting more than $434 million in tax credits. More than 180,000 families received the state EITC , currently set at 27.5% of the federal EITC, amounting more than $110 million in refunds. Thanks to both credits, more than 75,000 Connecticut residents were lifted out of poverty, including 40,000 children.
The EITC is particularly effective as it encourages and rewards work. Only households with earned income are eligible for the credit, and the refund is proportionally larger at lower income levels, climbing rapidly until the household income reaches $13,000, and slowly phasing out as income increases. As a result, it leads to significant boosts of employment, helping families become more self sufficient.
The additional income helps families become more financially secure, making them more stable. This is especially relevant for children, as it lowers the stress of their parents and it translates in better academic performance and graduation rates. This in turn improves social mobility, as it increases their likelihood to go to college and boosts their long-term earnings potential.
VITA plays a key role expanding the reach of the EITC in the community. Not only do VITA sites have significantly lower error rates than private preparers, but VITA sites also help families access the benefit in their own neighborhoods.
Marilyn Ondrasik, Interim Program Director
Donna and her one-on-one coaching partner, Silvia Paytas. Donna received the CAHS “Volunteer of the Year” award in 2015. CAHS photo.
A big thanks to Donna Liebman, super volunteer. With a background as a library media specialist, she came to volunteer at CAHS two years ago. She started with the Connecticut Money School, then expanded to teach financial programs to youth as part of the Youth Money School, and now is a financial coach who works individually with low- and moderate-income people to help them sort out their finances and move forward with sound financial practices. A student at Bulkeley High School in Hartford wrote on a blog about his workshop through the Youth Money School with Donna:
“We talked about how to make ourselves more successful and how to become more confident about our finances in the future. During class, we worked on exercises to determine how to manage money in different situations. I enjoyed learning about smart goals, more specifically, about the meaning of smart goals and how they can be used to help me become financially stable. I enjoyed talking about budgeting, how to track our money, and how to prepare for college expenses. This class was very helpful as my knowledge about managing and spending money has increased.”