Over the last year, we have seen the power of monthly payments in reducing the child poverty rate. As of December 2021, 3.7 million children had been kept out of poverty due to an expanded Child Tax Credit (CTC). But since the end of the advanced monthly CTC payments in December 2021, the child poverty rate has already jumped from 12% to 17%. There are now 3.7 million more children in poverty due to the expiration of the monthly Child Tax Credit payments, with Latino and Black children experiencing the largest increases in poverty.
However, despite the disappointing ending of the advanced monthly credits, because of the recent expansion of the CTC, families still have the opportunity to access half of their total CTC as well as other important and expanded tax credits such as the Earned Income Tax Credit (EITC)—by filing their 2021 taxes.
Prior to the credit’s expansion through the American Rescue Plan in 2021, nearly half of all Black and Latinx children were excluded from the full benefit because their families did not meet the minimum income qualifications placed by the government for this assistance. This changed when the credit became fully refundable in 2021 and available immediately to all eligible households. Because of this change, many families will be doing their taxes in 2022 for the first time.
For those families filing their taxes for the first time in order to claim these supports, Volunteer Income Tax Assistance (VITA) programs can help them through the complexities of the process. Many families spend precious hard-earned dollars each year on tax preparation services—a loss that can greatly affect their bottom line. That is why it is critical for families to be aware of how to access free tax preparation services that can help them make sure no benefit they are entitled to is left unclaimed.
Today is VITA Awareness Day, designed to raise public awareness about one such service available to families throughout the country. VITA has been a trusted resource for more than half a century, helping families file their taxes and obtain access to critical tax credits and refunds. These credits can serve as an important boost in families’ income—a way for them to get up to date with bill payments, pay down debt and save for the future. Each year, tens of thousands of IRS-certified volunteers trained by VITA– working at sites in every state – ensure that low-income households that cannot access professional tax services can still claim and keep the full amount of any tax credits which they have earned and are eligible for, including the CTC and the EITC. In 2021, more than 2,800 VITA sites—many still dealing with the ongoing ramifications of COVID-19—prepared nearly one million returns generating more than $1.7 billion in refunds to lower-income families. Impressively, VITA sites maintained a 96% accuracy rate – the highest in the industry.
For families with internet access who are comfortable doing their taxes online, another resource is MyFreeTaxes. United Way provides MyFreeTaxes in partnership with the VITA program to help filers prepare their tax returns on their own while getting the assistance they need. Since 2009, MyFreeTaxes has helped more than 1.3 million taxpayers claim every credit and deduction they deserve. In addition, another service called GetYourRefund helps low-income families prepare their taxes online with trained and IRS-certified VITA volunteers who will prepare and file their taxes online for them just like if they were at a physical VITA site. Both Prosperity Now and United Way are proud to work with VITA and other free tax preparation partners that provide quality, no-cost tax preparation to millions of families around the country.
Families are continuing to struggle to have enough resources to meet their financial obligations. In the face of an ongoing global pandemic, families barely getting by cannot afford to leave any tax benefits on the table. This reality is the impetus behind United Way and Prosperity Now’s efforts to continue to help families access critical help to navigate financial hardship. Getting taxes done safely and securely is critical for low-income families, and VITA services and other free tax preparation tools are more important than ever during this filing season. Keeping these programs viable and strong is a first step to giving families a tax refund that can be a lifeline for their financial stability.
This blog was co-authored by Joanna Ain, Associate Director of Policy for Prosperity Now. It was first published in The Hill.