PAF 101
Module 3, Lecture 4
“Do not confine your children to your own
learning, for they were born in a different time.”
–Hebrew Proverb
Class Agenda
•Announcements
•Earned
Income Tax Credit (EITC)
We Want You To Be A
TA! & Maybe Coplin
Wants You Too!
• Get Real Life Experience
• Get three PAF Credits
• Learn how to be a GREAT
employee
• Must have at least a 3.0
cumulative GPA and receive
at least an A- in PAF 101
Apply by October 27th
Interviews are October 30th,
November 2nd, 4th
Questions? Email Lauren Piefer
at lepiefer@syr.edu
Competition Points
Winners
Losers
As of 10/16/2015
Group #
Points
14
20
12
14
1
13
2
13
15
12
8
10
11
10
17
10
5
9
9
9
4
8
10
8
18
8
3
7
13
7
6
6
16
5
7
4
For next class…
• Paper
due 10/26
• Email TA societal problem by 8pm
tonight or lose 5 points
• Module 2 regrades due Monday
Earned
Income Tax
Credit (EITC)
Presented by: Ben Wahl and Nate
Birnbaum
October 16, 2015
The EITC Law
•“The federal earned income tax credit (EITC) reduces
the amount of taxes owed, and refunds the difference
if the credit is larger than the amount owed.”
(Center on Budget Policy Priorities website)
The Problem
•Too few eligible citizens file for the EITC in
Onondaga County
Evidence
Total Filers in Onondaga County in 2013: 211,656
Filers that are eligible for VITA services: 133,492 (63.07%)
Eligible Filers that used VITA services: 7,249 (5.43%)
Unknown Percent: Private sector filing of the tax returns, individual
filing
* Those who are eligible are files who reported an adjusted gross
income of less than $53,000
**Data are based on last year’s tax return season
Data are from the United Way, who received the data from the IRS
•“VITA is a free, IRS-sponsored program to help low and middle-income workers
have their federal and State personal income taxes prepared and filed
electronically at no cost.”
•“VITA also ensures that workers receive all the tax credits to which they are
entitled.”
(New York State website)
Basic Facts
• The tax helps the “working poor,” those tax payers
whose limited work hours and low wages keep them in
the low-income tax bracket
• The refund depends on a tax payer’s:
1. Adjusted Gross Income (AGI), which is gross
income minus specific deductions* that a tax
payer is eligible to take
2. The number of (qualifying) children
Basic Facts
Eligibility based on AGI and Number of Children
(Tax Filing for the Work Year 2014)
AGI must be less than…
(Single)
AGI must be less than…
(Married, jointly filed)
Maximum
Credit Possible
Status
No Qualifying Children
$ 14,820
$ 20,330
$ 503
One Child
$ 39,131
$ 44,651
$ 3,359
Two Children
$ 44,454
$ 49,974
$ 5,548
Three or more Children
$ 47,747
$ 53,267
$ 6,242
Example Family: Jessica Smith
Jessica Smith works as a cashier at McDonalds. She is a single-mother
of two children.
FACTS:
• Food-preparation sector employs 11 million people
• Accounts for about 1 in every 11 jobs
• Provided a median wage of only $9.09 an hour
• Jessica, as full-time, year-round worker (at $9.09/hour) makes
annual earnings of $18,180.
(Center on Budget Policy Priorities website)
Example One:
Based on our example family, “Jessica Smith.”
Federal Tax Withholding
“Qualifying persons who file federal tax returns get back some or all of the federal
income tax withheld from their pay during the year. Even workers whose earnings
were too small to have taxes withheld can get the EIC.”
Jessica had:
907.50
+ 1365.75
2,273.25 in taxes withheld during the year.
Thus her “extra income” is essentially:
5,387 ----> Full Amount she gets back from EITC
- 2,273 ----> Amount withheld in taxes this year
$ 3,114
How much Jessica gets paid
an hour
$18,180 ----> Salary During the Year
+$3,114 ----> “Extra Income” back from Government
$21,294 ----> Total End of Year Earnings
2,000 total hours/yr
$21,294 / year
÷ 2,000 hours/ year
$10.65 /hour
Is this a valid substitute for increasing the minimum wage?
Impact
• In 2013, about 6.2 million people were lifted out of poverty, including
about 3.2 million children.
• Studies suggest that the EITC “increase(s) aggregate hours worked.
Thus, EITC seems to promote one broad goal of welfare reform—
encouraging work among single-parent families— without reducing
overall hours worked” (Beverly, 2002).
•“What research has shown, however, is that most EITC recipients only
get the credit for two consecutive years or less. Many of them soon
move up the income ladder and start paying taxes back into the
system.” – The Washington Post
•The EITC reduced federal tax revenue by $59 billion in 2012 whereas
the cost of Supplemental Nutrition Assistance Program (food stamps)
was $80 billion (Hungerford, 2013).
Federal vs. State
• 24 states and the District of Columbia
administered their own state EITCs
(2014)
•When you apply for the Federal EITC,
you are automatically enrolled for the
State
How do citizens apply for EITC?
For-Profit versus VITA
EITCoutreach.org
Why VITA Helps
• Individuals save by not paying for tax preparation
• Electronic filing is increasing at VITA sites and allows workers to
get their money faster
• Tax preparation volunteers are well trained and reduce the
error rate
VITA in Syracuse
Value of EITC in Syracuse
Value of Federal EITC :
All County:
$ 3,097,509
CA$H sites only:
$ 2,576,685
Value of Fed & State EITC:
All County:
CA$H sites only:
Average Refund per Filer:
All County:
CA$H sites:
$4,130,012
$3,435,580
$ 1,264
$ 1,620
*2013 data
VITA in Syracuse: CA$H
Coalition
• CA$H stands for Creating Assets, Savings and Hope
• A part of the United Way
•The primary focus is to collaborate with as many
Onondaga County VITA site providers as possible in order
to expand the scope and the efficiency of the VITA efforts
in our region.
VITA in Syracuse: CA$H
Coalition
•There are three parts to the sites
o Preparing taxes
o CA$H Coach Volunteer gives Financial Education Literacy
o Other providers of opportunities for low income
citizens: health insurance navigators, credit unions, etc.
VITA in Syracuse: CA$H
Coalition
These are the sites:
• Shoppingtown Mall *P.E.A.C.E.*
• Syracuse Education Opportunity Center
• Assisi Center
• St. Albans church
• Beauchamp Library (Onondaga County Library)
• Le Moyne College Library
Causes of low EITC/VITA rates
• Not enough VITA sites or tax preparers
•Not enough awareness among those who qualify.
•What is a policy solution to either or both of these causes?
Le Moyne College
Le Moyne:
• Undergraduate students take a three credit ACT-301 Individual
Income Tax
•Requires: 8 hours of volunteer work as part of students’ grades
•There are 56 students enrolled in the course this year. The rest of
the accounting department is welcome to volunteer however it is
not required.
• Graduate student is the coordinator who organizes the site, 5 tax
preparers, one greeter, and one quality reviewer
Fall 2015
Goal: Increase the number of Onondaga County citizens who
use VITA sites to get their taxes completed in the 2015 tax year
Steps: Increase the number of Syracuse University students who
volunteer at VITA sites
• Train Tax Preparers by teaching one credit ECN
300 level class
Spring 2016 and beyond….
• 1-credit class to get VITA volunteers class credit
•Collaborate with Newhouse
•SU VITA site
Current Positions
1199/SEOC Greeter: Requires a quick 10 question quiz online
(1) Greet patrons as they walk in.
(2) Being friendly, saying hello, distributing the first bit of paperwork
the patrons must fill out, and answering questions
Current Positions
CA$H Coach: Requires a quick 30 minute orientation.
(1) Greet clients at the VITA site and explain the resources sheet
(2) Help VITA participants complete the Saving Plan form
(3) Potentially answer some basic questions about accounts, money,
and ways to save
Current Positions
Tax Preparer: This role requires you to become IRS certified.
(1) Process can take about 8 hours.
(2) Reading information online and passing two "exams." There are
sets of practice questions to help you.
(3) Once this is complete, you volunteer at the VITA sites and help
the low-income individuals file their taxes
(4)This requires the most work, but it would look great on a resume
Why should you get involved?
•This is a real policy that can and has actually helped people
•It is an opportunity to get quantitative skill experience that can
be translated directly to a resume (ex. Tax Certified)
On-Going Project
• Interested students should contact us at:
•
•
blwahl@syr.edu
ngbirnba@syr.edu
• Name and Email Address
• What aspect interests you?
Thank you.
Monday’s Speaker
David Van Slyke
Louis A. Bantle Chair in Business and Government Policy
Department of Public Administration and International Relations
Maxwell School of Citizenship and Public Affairs
Syracuse University
For more information on David Van Slyke, visit:
http://www.maxwell.syr.edu/pa/Van_Slyke,_David/
For next class…
• Paper
due 10/26
• Email TA societal problem by 8pm
tonight or lose 5 points
• Module 2 regrades due Monday