Pro-bono tax assistance - CPAs wanted all year long.

AuthorHolub, Steven F.
PositionCertified public accountants

There are some little-known facts about the earned income credit (EIC):

  1. For 2004, over 21 million workers received EIC benefits, for a total credit of $37 billion; see www.cbpp.org/ eic2005/eic-welcome.pdf. Of that amount, most was refunded, finding its way back into low-income communities.

  2. Of the returns filed in 2002, approximately 75% of the benefits went to families with adjusted gross incomes between $5,000 and $20,000; see Greenstein, "The Earned Income Tax Credit: Boosting Employment, Aiding the Working Poor," Center on Budget and Policy Priorities (rev. 8/17/05), available at www.cbpp.org/7-19-05 eic.htm (Greenstein).

  3. According to the Census Bureau, in 2003 the EIC lifted 4.4 million people out of poverty, including 2.4 million children; see id. Without the credit, the poverty rate among children would have been nearly 25% higher. The EIC is responsible for lifting more children out of poverty than any other single program or category of programs. In 2003, it reduced the number of children in families with below-poverty disposable income from 12.6 million to 10.2 million, and the number of Americans (all ages) in families with below-poverty disposable income from 35.3 million to 30.9 million, a decline of 4.4 million. This analysis uses a measure of poverty that counts food, housing and energy assistance benefits as income, and subtracts income and payroll taxes.

  4. Eighteen states have enacted their own version of the EIC that supplements the Federal credit; see id. These states have various eligibility and filing requirements.

Despite the large number of taxpayers claiming the EIC, the complexities associated with eligibility and the additional difficulties of state compliance, only a fraction of the taxpayers who claim the EIC and its state equivalent obtain free assistance in filing their returns. For example, in the Washington, DC area, less than 10% of returns filed in 2004 were prepared by third-party preparers for free, despite an active, organized outreach program to educate taxpayers about the EIC. In locations without such resources, the percentage of EIC taxpayers who obtain free assistance is even lower. Accord-ing to IP, S statistics, of the over 22 million EIC claims filed for tax year 2003, approximately 500,000 (roughly 2%) were prepared in Volunteer Income Tax Assistance (VITA) clinics sponsored by the Service.

Taxpayers either prepare their own returns or obtain the services of paid preparers, who often...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT