Last year, 21 million families with two or more children qualified for the Earned Income Tax Credit, providing tax refunds of up to $4,300. IRS studies indicate millions more families are eligible for this tax credit but fail to claim it.
"Today we take a giant step toward educating the public, particularly lower income families involved in HUD's programs, of the significant tax savings that are available to them," said Jackson. "Just think about how much money can be put in the pockets of working families across America if everyone took advantage of the tax breaks available to them."
Everson said, "One of our important objectives is to assure that all people get the benefits they are entitled to. We can help low-income people fully participate in the tax system through free tax return preparation and information on EITC and other credits. I commend Secretary Jackson and HUD leaders for helping expand outreach to this important group of taxpayers."
In addition to the Earned Income Tax Credit, HUD and IRS plan to aggressively promote Child Care Tax Credits and free tax preparation services to families living in public housing. Individual Development Accounts also offer lower income persons asset-building opportunities that combine personal savings with tax exempt matching funds that can be used to buy a home or fund a college education.
Ayyisha Turner is just one example of how using these tax credits helped put and her family on the path toward homeownership. Formerly living in public housing in Washington, DC, Turner used the Earned Income Tax Credit and accumulated savings through an Individual Development Account to purchase a home for herself and her two children.
The HUD-IRS agreement will emphasize greater coordination between the agencies, expand information sharing and building on existing services. The partnership will work to encourage community-based collaboration to educate and assist low-income families.
This partnership promotes a national tax assistance program using the IRS Volunteer Income Tax Assistance (VITA) Program. This unique partnership will:
HUD provides approximately $31.5 billion a year to state and local governments, as well as nonprofit organizations that offer housing and services to low- and moderate-income residents. For example, approximately 3,400 public housing authorities provide HUD-funded rental assistance to three million low-income residents, many of who may be eligible for these tax benefits.
The IRS hopes to work through these communities and organizations to improve taxpayer outreach and education. HUD will notify all its grantees and encourage them to assist the IRS with its outreach efforts and to educate taxpayers about free tax assistance sites, specifically regarding the underutilized Earned Income Tax Credit. While it may take a couple of years for the agreement to reach its full potential, the short-term efforts should provide an immediate benefit to many low-income families.