What is the EITC?
The Earned Income Tax Credit is a both a federal and now a N.C. tax credit. Designed to "make work pay", the EITC provides low- and moderate-income working families earning less than $48,279 in 2009 a credit on their earned income. The credit can put up to $5,940 in federal and N.C. EITC into the pockets of those who qualify. Each year, the credit lifts an estimated 5 million people out of poverty, including 2.5 million children.
How did the EITC originate?
First enacted in 1975 under President Gerald Ford, the EITC expanded under presidents Ronald Reagan, George Bush, Sr., and Bill Clinton—and has had longstanding bipartisan support.
How many people in North Carolina currently file for the EITC?
In tax year 2005, 770,644 working families, 21 percent of all NC taxpayers, filed for the credit and received a total of more than $1.5 billion, an average of $1,950 per family.
How many people in North Carolina who are eligible for the EITC don't file for it?
Nationally, the IRS estimates that only 75 percent to 85 percent of those eligible for the credit file for it. Using these 75 and 85 percent figures as a guideline, we estimate that in North Carolina between 135,000 and 256,000 eligible tax filers fail to claim the credit each year, leaving between $132 million and $250 million dollars unclaimed each year.
What do people typically do with the EITC once they receive it?
They do the same things most of us do with our tax refunds: buy things they need, pay down debt, and put some away. The EITC can be a vital tool in helping people save for education and training, finance transportation to work, start a small business, or save for a home.
Where can eligible people go to get free help in preparing their income tax returns?
Free tax preparation services are provided through the IRS Volunteer Income Tax Assistance, or VITA, program. Volunteers that work at community organizations are trained and certified by the IRS.
For a listing of who provides such services in your community, call the Connectinc free tax helpline at 1-888-927-3230, your local United Way 2-1-1 helpline, or visit the EITC Carolinas Web site at www.eitc-carolinas.org. You can also call the IRS helpline at 1-800-929-1040.
Is there anything we can do to help those receiving the credit take better advantage of this lump sum check?
Yes. Encourage them to be smart shoppers when looking for help in preparing their tax returns. Fees for tax preparation vary widely, and many charge excessive rates for "refund anticipation loans," thereby reducing the value of the credit to hard-working families. Free or low-cost sites represent an important alternative to these services.
How can employers help support their employees’ access to the EITC?
The most important thing is to make sure employees know about it. Employers can use a variety of strategies such as:
- Including EITC information with W-2 forms;
- Including information in employee newsletters and posting information in employee common areas such as lunchrooms; and
- Working with local VITA programs to host free tax prep services on-site and hosting financial education “lunch and learn” programs.
Employers can also encourage their workers to use direct deposit of paychecks so that they become “banked” and will have an account for speedier direct deposit of tax refunds.
How do I volunteer?
Contact your local free tax preparation site and ask. Volunteer opportunities are available for people interested in greeting people as they walk in the door, helping prepare returns, babysitting children while others are preparing returns, or providing goods and services for free income tax preparation sites.
EITC Data by county
EITC Data by NC Senate District
EITC Data by NC House District
Brookings Institution Research and Data by State, County, Zip Code