FAQs

What is the EITC?

The Earned Income Tax Credit is a federal tax credit designed to "make work pay" by providing low- and moderate-income working families earning less than $39, 783 a credit on their earned income. The credit can put more than $4,700 in the pockets of those who qualify; the average credit is $1,700. Each year, the credit helps to lift roughly 5 million people out of poverty, including 2.5 million children.

How did it 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 2004, 733,000 working families, more than 18 percent of our taxpayers, filed for the credit and received a total of more than $1.3 billion, an average of $1,735 per family.

How many people in North Carolina who are eligible for the EITC don't file for it?

Nationally, only 75 percent to 85 percent of those eligible for the credit file for it. In North Carolina, more than 100,000 eligible families have not accessed the credit, leaving more than $100 million 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?

For a listing of who provides such services in your community, call the Connectinc free tax preparation helpline at 1-888-927-3230 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.

What is EITC Carolinas?

EITC Carolinas is a program of MDC, Inc. that supports community organizations in North and South Carolina to help low- and moderate-income working families reclaim and keep their earnings by:

Providing free tax preparation services through IRS-approved Volunteer Income Tax Assistance (VITA) sites
Providing asset building help through financial education, savings opportunities, and Individual Development Account programs that enable EITC recipients to become more economically secure
Publicizing the EITC through intensive local campaigns