Take The Lead Make An Impact

Transcription

1 Take The Lead Make An Impact Tax Outreach Action Kit An Illinois Credit Union League Outreach Initiative

2 Inside This Toolkit Introduction 3 Why Tax Awareness? An Overview 4 Seize the Moment Fueling the Cash Craze EITC: Missing Out Underserved and Overcharged Getting Ready 6 Reaching Out A Few Specifics... So, Are You Ready? Why Run A Tax Awareness Campaign Asset Building 11 Investing in the Future Resource Directory 12 Web Resources and Outreach Material A Few Fast Facts 13 Research Highlights Frequently Asked Questions 14 Talk to Your Member A REAL Solutions Participating League This Toolkit is only meant to be used as guidance and should not be relied on as legal or tax advice. Please seek the counsel of an experienced tax attorney or tax professional for further assistance.

3 Introduction Page 3 Welcome The credit union philosophy of people helping people starts with a belief that the work we do everyday will make a difference in the lives of our members, and in the communities we serve. To reinforce this value-driven culture, the Illinois Credit Union League recognized an area where our actions, as a movement, can have a significant impact in improving the financial lives of working families. Being part of an industry that can touch thousands of communities, millions of members and countless consumers means we have an enormous opportunity to take the lead, and change people s lives for the better. We hope you will join in and help us make an impact. Recognizing no two credit unions are the same, we have created this Action Kit to provide you with tools, products, and information to help run an effective Tax Credit Awareness Campaign, one that makes sense for you and the credit union you run. Whether you start small or go big, you will find material that will help you inform eligible and potential members, employees, and the community about important tax credits. You will discover ways to motivate them to file their tax returns and link them with opportunities to obtain free tax filing assistance. You will help them build assets and provide them with a pathway to financial freedom.

4 42% Why Tax Awareness? An Overview Page 4 Seize The Moment For millions of low to moderate-income families, tax time brings the largest windfall of cash they will see all year, and an ideal opportunity for credit unions to connect with this emerging market, and do so effectively, responsibly and profitably. Families with modest incomes, immigrants and new Americans, young adults, and other minorities, comprise an emerging market in the United States, many of which are currently unbanked consumers. As minority groups continue to grow in population, wealth, and buying power, it becomes essential that credit unions begin to build relationships with this new consumer. By becoming a trusted resource for taxpayers, your credit union can reach new members, increase community visibility, create political goodwill, and join the growing number of banks and financial product providers in seizing the tax moment. Fueling the Cash Craze The Earned Income Tax Credit (EITC) is a refundable federal tax credit for low wage working families and individuals. Enacted by congress in 1975, the EITC has a long history of bi-partisan support, and has grown to become one of the most successful federal anti-poverty programs ever developed, lifting nearly 5 million people out of poverty each year, including 2.5 million children. Twenty four states, Illinois among them, have followed suit and enacted state EITCs. For Tax Year 2008, eligible working families in Illinois can earn nearly $5,200 in state and federal EITC. Many qualifying families are also eligible for the Child Tax Credit (CTC), as much as $1000 per child this year. EITC: Missing Out Yet, despite the considerable benefit EITC might bring to working families, an estimated 20-25% of eligible EITC taxpayers do not receive the credit, either because they don t realize they qualify or don t know how to claim it (the IRS tax booklet on EITC is a staggering 56 pages). That means eligible families and individuals are missing out on an astounding $2.5 billion each year. As a result, they are going without the income boost that many low wage workers need to make ends meet. Despite the dire statistics, there is hope, people of every income level are actively talking about poverty as a threat to the well being of all. Lawmakers are proposing solutions and communities are taking steps to decrease the hardships faced by the low-wage in Illinois. The fact is, any given organization can find a way to become involved. Endeavors can range from a simple effort to raise public awareness to an indepth initiative that not only informs families about EITC but also helps them claim and make the most out of this benefit. A CFSI Underbanked Consumer Study defines the U.S. Underbanked Population as: 40 million U.S. Households considered unbanked 106 million U.S. adults 18 and older who are considered unbanked $26,390 median household income $47,500 mean household income 63% homeowners 28% renters 8% pay no rent 3 mean number of adults per household 51% Currently have neither checking nor savings accounts 48% Have never had a bank account 28% Have borrowed money in the last 12 months 25% Have prime or better credit scores (on the VantageScore scale) 33% Score as non-prime or high risk

5 Why Tax Awareness? An Overview Page 5 Underserved and Overcharged For those that do claim the credit, 70% turn to commercial tax preparers, and at least half of these families obtain a refund anticipation loan (RAL). Tax preparation in Illinois averages $120 for an employed low-wage family; this amount can more than triple if the customer is lured into a RAL. Indeed, in 1999, nearly $2 billion in EITC refunds was siphoned away by tax preparers this $2 billion was money that Congress intended for the pockets of the low- wage worker, not the storefront tax preparer. The truth is, taxpayers are not forced to walk into the storefront tax shop, and professional tax services fill a necessary function without them many poor families might not receive the tax assistance they so desperately need. Yet, clearly the public interest is not served when the low income working families with children subsidize a growing multi-billion dollar industry. That s why it is so important to promote free alternatives. The IRS: A Trusted Resource The Internal Revenue Service s Volunteer Income Tax Assistance (VITA) program offers free tax help to low wage (generally, $40,000 and below) people who cannot afford professional assistance. Volunteers from all walks of life, including members of the local community, receive training to help prepare basic tax returns in communities across the country. VITA sites are typically located at community centers, libraries, shopping malls, and other convenient locations, like credit unions, and most are equipped to file tax forms electronically. The Tax Counseling for the Elderly (TCE) Program provides free tax help to people age 60 and older. As part of the IRS-sponsored TCE program, AARP offers the Tax-Aide counseling program at more than 7,000 sites nationwide during the filing season. The military also has a strong VITA program. The Armed Forces Tax Council (AFTC) oversees the operation of the military tax programs worldwide and serves as the main conduit for outreach by the IRS to military personnel and their families. The IRS continues to expand its partnerships with nonprofits, and because they are aware that credit unions enjoy a strong and trusting communication network with its members and the communities they serve they are eager to partner. Bear in mind that the IRS supports a financial institution presence at VITA sites, and trusts the credit union (or bank) will be influential in encouraging the client to save a little money or open a credit union (or bank) account. Take The Lead. Make An Impact. Credit unions have an opportunity to take the lead and do what they do best help working people raising families build a future free of financial hardship. Whether you put up a poster, become a VITA volunteer, or run a full-fledged campaign, your efforts to promote EITC, VITA and asset building will make an impact. Our commitment to helping you build a stronger community is embodied in our latest initiative, ipaytaxes.org our free, uncomplicated web resource for Illinois taxpayers. Check it Out!

6 Getting Started Page 6 Reaching Out Credit unions can play many roles. Involvement in Tax Awareness can include distributing free flyers, displaying posters, , internet, letters or simply talking to your members about tax benefits. Some credit unions may want to host VITA sites or provide volunteers at existing sites. Generally, the appropriate first step in a tax outreach campaign is raising awareness, then expand to other activities in future years. Start out by focusing on educating your members and others about EITC, free tax preparation and asset building. The fundamental goal of a tax awareness campaign will contain elements from these three areas: Outreach Get the word out and Increase the number of families who know about and claim important tax credits. Free Tax Preparation Increase the number of families that know about and use the VITA process by which taxpayers can take advantage of free tax preparation and tax credits. Asset building Encourage eligible taxpayers to save at your credit union. Promote financial education and connect taxpayers to other asset-building products. Remember, the IRS wants you to share the value of credit union membership with clients at VITA sites! An integral part of an effective campaign includes building coalitions. Partners are the backbone of a successful program and can bring contacts, skills, funding, volunteers and new members to your credit union. Whether you decide to display a poster or host a VITA site - reach out and build a coalition! Community based coalitions have much greater access to taxpayers and can offer the important intangibles of credibility and trust. A few ways to get your foot in the door: Offer to provide posters or other material to local centers of worship; Ask religious leader to alert congregants who may qualify for credits, or place information in bulletin; Sponsor or work with food pantries, child care centers or schools of worship centers; Display information on your website. Provide a link to ipaytaxes.org. If a nearby organization, military site or other group has a VITA site, offer credit union services; Reach out to community based programs that support foster parents; In rural communities, work with local, and trusted organizations; Inform small business owners about tax credits and offer your services. Some businesses may provide space for tax preparation; Involve statewide organizations that may have connections in areas you may want to reach. Work with the Cooperative Extension Service. (They may provide volunteers and assist in sending information to eligible families); Reach out to food banks, soup kitchens, shelters, welfare agencies and housing programs; Encourage your school district to provide information about EITC, and other tax benefits to families; Staff a table at a tax site. Offer Incentives for taxpayers who sign up for direct deposit;

7 Getting Started Display Go Direct and tax prep posters, brochures and other materials; Distribute material to half-way houses, job training programs, unemployment offices, substance abuse centers and colleges; Work with groups that are involved with people with disabilities; Reach out to schools. Often times they can provide computers, facilities and student volunteers, and Work with your chapter to organize a special tax awareness event. Page 7 New Parents, including foster and adoptive; Divorced or separated parents Grandparents raising grandchildren; Parents raising disabled children; Workers who have English as a second language; Homeless or dislocated workers; Eligible immigrants, especially Latino families; People serving in the military Workers not otherwise required to file a tax return due to low earnings, and Workers that fear they will lose eligibility for other benefits. Idea for Chapters: Chapters may want to reach out to the community and connect with organizations with mutual interests. The first step is to ascertain whether a local coalition exists. If so, JOIN IN! If not, there are many ways to build a coalition. Talk with respected community organizations and ask them to participate. If your efforts are successful and you manage to assemble a few interested parties, a suggested outline for the introductory meeting includes: Welcome from the chapter Overview of EITC Description of the need for EITC outreach (refer to the county by county document) Potential impact that an outreach effort could have on eligible residents and the local economy (again, you can refer to the county by county document) Determine which participants are supportive of the effort and identify the resource they could bring to the campaign, such as volunteers, space, computers, marketing, etc., and Depending on the size of the coalition, it is useful to the have an in-charge individual, or assign groups to cover certain areas of the campaign such a as marketing, volunteer recruitment, etc. If you have questions or need additional information call Joni Senkpeil at (630) A Few Specifics... Research indicates that the following groups are less likely than others to know about the EITC: Parents who just entered the labor force; The financial rescue legislation enacted by Congress in October 2008 included a Child Tax Credit expansion that will immediately benefit 13 million children. Because the EITC is administered by the Internal Revenue Service, certain staff are dedicated to EITC related outreach. Stakeholders, Partnerships, Education, and Communication (SPEC), part of the Wage & Investment Division, is the IRS office devoted to promoting the EITC, VITA sites, and supporting other tax-related programs for lowincome taxpayers. The Illinois SPEC Manager can be contacted at (312) State records reveal that Illinois is home to 56 VITA sites. 80% of Illinois counties have zero VITA sites. See how your county fares. Click here. For most, tax-filing season begins right after the Holiday season ends. While tax awareness can be promoted all year, the month of January should see the strongest focus. Hang a poster, talk to your members, send an get involved! The material is FREE.

8 Getting Started Page 8 So, Are You Ready? Pre-Filing (September December) The planning for tax assistance sites (VITA) begins in early fall. Always in need are: volunteers, computer equipment, publicity, and safe, secure facilities convenient to bus routes or other public transportation. Having all the items needed to sponsor VITA is wonderful, but not necessary. The IRS can easily link you up with organizations that may have other pieces of the puzzle. If one organization has a cadre of employees who are interested in volunteering at a tax site, the IRS can help link that group with other groups locally that may have computer equipment to offer, or have space to host a site. If your credit union is interested in free tax preparation, fall is the time to get involved in a local coalition. It is important to examine the current status of any existing community effort in order to maximize resources and not duplicate ongoing initiatives. Fall is also a good time to begin tax education campaigns. Remember to keep taxpayers informed all year. Credit unions that are interested in or able to share information with their members will find ample (and free!) campaign materials on the Earned Income Tax Credit. Include ongoing promotion of ipaytaxes.org. Listed below are the major resources involved with sponsoring a VITA site. Your conversation with the local IRS SPEC office will help determine your sites needs, since availability of resources can vary from one locality to another. Software. Generally, IRS furnishes the software for return preparation and e-filing. IRS currently provides TaxWise brand software for VITA sites. Computer(s) that can be loaded with tax preparation software. At least one must have an Internet connection to electronically transmit the returns. Also, printer(s) to print the taxpayers copies of the returns and related office supplies. Recruitment of volunteers. Volunteers may be recruited from within the credit union and from the community. Use your knowledge of the community to locate your volunteer pool. Sometimes other partner organizations in the area can assist with volunteer recruitment but that is not always the case. You will arrange with volunteers the number of hours they will spend per job. Interested in volunteering? Check out IRS s e-learning program. Site Coordinator. This important position involves general management of the VITA site, including scheduling of volunteers, loading software and updates, transmitting returns, resolving e-file rejects and reporting to the IRS. Some organizations use a paid staff person for this position. In addition to volunteer tax assistors, the site will need volunteers who can act as screeners and, in some cases, individuals who can serve as computer troubleshooters. Hours of operation. You will have great discretion in setting site hours, but they should be at times convenient to the target population. Some sites elect to prepare returns by appointment to aid in scheduling volunteers time. Tax expertise. IRS maintains a tax help site especially for VITA volunteers. It is important to remember that VITA is designed to prepare the simple, wage earner-type of returns. Physical space where taxpayers can come to have their returns prepared.

9 Getting Started Page 9 Training. IRS arranges training for the volunteers and site coordinator. Class times are approximately four days for tax law and one day for TaxWise software training. However, tax law training can now be taken on the volunteers schedule using the IRS web-based training, Link & Learn Taxes. Volunteers are tested at the To find out where the VITA sites are in your area, call the IRS at during tax season. A list of Tax Counseling for the Elderly (TCE) sites is available by calling during tax season. You may also log onto the AARP web site ( and find out where other free tax assistance is offered in your area. Research indicates that the typical VITA site has very limited hours, will serve a few hundred taxpayers annually, generating between $200,000 - $500,000 in refunds. Most VITA sites start small, build a foundation, and become more efficient. Realistic one-year goals include 5 or more volunteers, 25 returns, and $25,000 in refunds. Grant opportunities are available to existing and prospective qualifying VITA programs: Illinois Credit Union Foundation The National Credit Union Administration Internal Revenue Service Tax Filing Season (January April) January through April is traditionally known as tax time. The VITA Program is in full swing, and your education campaign is ongoing. A good time to think about observing a VITA site in action, it can be a great way to become familiar with the process. conclusion of training. The local IRS SPEC It is also a good time to address asset building with office will discuss with you the best method of individuals who are getting their tax returns training for your site. prepared at volunteer sites. Credit unions can encourage families to use a portion of their tax refund to begin saving. Often VITA customers do not have bank or credit union accounts or even the simplest of financial strategies in place. Post Filing Season (May-August) The end of filing season is a good time to celebrate! Your members and potential members now know and recognize credit unions as sources of valuable information, services, products, and benefits. Thus, name recognition is one benefit that grows from community tax assistance. Your credit union may use this time to determine whether to expand its participation in tax awareness to include VITA sites for next year. The possibilities of partnering are endless and the effects are boundless. If the mission of your credit union includes serving people of modest means call Joni Senkpeil (630) today and she will direct you to the appropriate IRS-SPEC who will help you every step of the way. Be A Volunteer Tax Campaigns are always looking for enthusiastic volunteers for a variety of responsibilities. They include assisting with outreach, being a greeter, and becoming an IRS certified volunteer. Visit the IRS Partner and Volunteer Resource. VITA volunteers are not expected to be tax experts, but they must be trained and certified to prepare returns. Volunteers do not sign any tax returns, and are protected from legal liability by the Volunteer Protection Act of 1997, provided they do not violate federal laws.

10 Getting Started (continued) Page 10 W h y R u n A T a x A w a r e n e s s C a m p a i g n? Gain new members; Provide a reasonable alternative to the commercial Refund Anticipation Loan (RAL); Promote the benefits of the CUMoney and other prepaid cards; Promote financial literacy; Build ties with trusted community organizations, SEGs, and others; Benefit from name recognition - members and potential members will recognize your credit union as a source of valuable service; Help to raise families above the poverty line, but also return money to the community, helping the overall economy; Receive positive attention by federal and state lawmakers; Help educate the estimated 25% of eligible Earned Income Tax Credit filers that do not know about the credit or how to file for it. Consequently, millions of dollars in refundable tax credits each year are not reaching the pockets of the low-income worker or the neighborhoods in which they live or the credit union accounts in which they own; and Help educate the 70% of EITC recipients that rely on storefront tax preparers, half of which obtain a refund anticipation loan. While these taxpayers may receive the tax credit to which they are entitled, billions are siphoned away by tax preparers.

11 Asset Building Page 11 Investing in the Future Data suggests that 20% of U.S. households are unbanked, equivalent to 22.2 million families that lack a transaction account at a mainstream financial institution. In addition, nearly 20%, or 22 million families are considered Underbanked consumers, those that have no more than one transaction account at a bank or credit union and who tend to rely on check cashing outlets, payday lenders, or other money service businesses for financial transactions. The lack of financial service relationships among this large section of the U.S. population (44 million U.S. households) represents significant opportunities for credit unions looking to acquire new members. Bringing these families into the financial services mainstream will mean lower costs and more opportunities for them to plan and save for the future. After all, it s not only good for these families, it s good for the local economy, the national economy, and good for the credit union. Tax Time is the Right Time To Make the Connection The EITC can represent the largest sum of money that a low wealth family holds during the year and a perfect time to make the connection. Tax site volunteers are ideally placed to reach taxpayers with the message that direct deposit to your credit union is safe and easy. Implementing or participating in a VITA site presents an excellent opportunity to open new accounts and to deliver financial education, The more families know about credit unions, budgeting, asset building, and overall finances, the more likely they are to improve their financial health and overall family economic situation. with a long list of youth outreach and financial literacy resources from a variety of providers. Most materials are free. Individual Development Accounts, or IDAs, are matched savings accounts that help low tomoderate income individuals build assets. IDAs are generally used to help people save for the purchase of a home, pay for education, or start a small business. The Corporation for Economic Development (CFED) released Assets and Opportunity Scorecard, a comprehensive look at wealth, poverty and the financial security of families in the United States. The Scorecard ranks the 50 states. Take a look at Illinois. The Illinois Treasurer s Office also administers programs to promote the financial health of Illinois residents. The Finally Home program serves as an alternative to predatory lenders by assisting prospective homebuyers with less-than-perfect credit purchase a home. The Bright Start College Savings Program enables families to invest money tax free for their children s college tuition. The Treasurer s Cash Dash program reunites billions in lost, forgotten and abandoned funds with its rightful owners. The Treasurer s Office offers a series of financial education courses and seminars that focus on personal savings, debt reduction and identity theft. The Illinois Youth Involvement Council (IYIC). A linked program of the Illinois Credit Union League, provides affiliated credit unions

12 Resource Directory Page 12 Outreach Materials & Resources County by County Find out how many in your county are missing out by clicking here. Free Outreach Flyers Statement Stuffer Full page ad Door hanger What to Bring to a VITA Site Tips for the Taxpayer IRS Marketing Express IRS Ready-to-Use Products More from the IRS Direct Deposit Go Direct Material AARP Tax-Aide program provides free tax counseling to taxpayers with special attention to those 60 and older. The Brookings Institute Metropolitan Policy Program provides decision makers with research and policy ideas for improving the health and prosperity of cities and metropolitan areas. Website contains state and local EITC data, briefing papers, analyses, and other resources related to many current political issues. The Center for Economic Progress helps lowwage families achieve financial stability using the tax code. Operating at the local, state, and national levels, the agency provides direct services, education, and advocacy. National Community Tax Coalition, a project of the Center for Economic Progress, leads the national community-based movement in connecting working families to tax credits and economic opportunities. EITC Tool Kits Illinois Credit Union League Center on Budget and Policy Priorities Internal Revenue Service Resources for VITA/TCE Sites NCUA PowerPoint IRS Volunteer Site Coordinator s Handbook IRS Volunteer Tax Preparer Training Scope, Curriculum and Resources AARP TaxAide Good Web Resources ipaytaxes.org, a project of the Illinois Credit Union League, provides Illinois taxpayers with a wealth of tax-related information. Internal Revenue Service provides partners with a variety of fact sheets, publications, and assistance in developing and implementing community based partnerships. Illinois Treasurer s Office provides guides, resources, programs and online tools to promote the financial health of Illinois residents. Special Events EITC Awareness Day January 30, 2009 Organizations, governments, employers and others interested in helping taxpayers who earn less than $41,646 get the tax credit they deserve are invited to join together and raise awareness about EITC on Friday, January 30, Contact your IRS relationship manager or contact IRS at partner@irs.gov for information about how you can get involved in your community.

13 A Few Fast Facts Page 13 Research Highlights While preparing this toolkit we came across some interesting information worth sharing: What our CUNA economists are saying: Payday lenders, pawnshops and other non traditional lenders are eroding credit union market share. The crowded financial services sector includes 13,000 check cashing outlets, 14,000 pawnshops, and 10,000 payday loan stores, nationwide. Credit unions need to pay attention to how other institutions serve the emerging market population. There are 3 times as many payday licenses as McDonald s in Illinois The payday lending industry quadrupled in size within three years. Few takers of the rapid refund loan realize they re actually borrowing their own expected tax refund. It s not just tax-time RAL s! Pay stub RALs are made in January using the year-end pay stub information, while holiday RALs are made during November and December. Both types of loans are expected to be repaid from the consumer s anticipated tax refund. Some check cashers also sell RALs. In addition to check cashers, fringe RAL providers include used car dealers and other retailers. Internet payday lending websites are promoting RALS. The men and women of our armed forces are a prime target market for RALs. In 2006, the number of H & R Block-facilitated RALs was 4 million. In 2005, H & R Block earned $182.2 million in revenues from RALs. In 2005, Jackson Hewitt sold 2.4 million tax refund products, including 1.2 million RALs. Banks are also becoming more active in this industry by providing capital to payday lenders and entering into partnerships to originate payday loans in states that prohibit stand-alone payday lending called "rent-a-charter" deals. (Source: The Center for Responsible Lending.) 1500 bank accounts were opened this filing season at VITA sites in Illinois. Credit unions in Illinois can collectively reach 3 million members nearly as many as the IRS largest local coalition partner. Commonwealth Edison distributed EITC flyers in billing statements to their 3.2 million customers. Chicago Public Schools distributed 450,000 EITC stuffers in February report cards. Comcast cable distributed EITC flyers in billing statements to their 1.6 million customers EITC is tax law, not assistance it s not a giveaway. It goes to working people. Congress created the EITC to make the tax system fairer for all, regardless of income. For example, in tax year 2003, the poorest one-fifth of Illinois households paid about 13% of their incomes in state and local taxes while the wealthiest 1 percent of earners spent less than 6 percent of theirs on such taxes. Low-income families simply pay more than their fair share for the public goods that we all enjoy from roads and schools to police and fire protection. Not a single county in Illinois (all 102) are without pockets of poor. 4 million of our seniors in the nation are poor, about 5% call Illinois home. 13 million of our children in the nation are poor, Illinois is home to over 500,000

14 Frequently Asked Questions Page 14 Talk to Your Members Be ready to answer these commonly asked questions with credit union members and others interested in learning more: What is EITC? The Earned Income Tax Credit (EITC) is a federal and state tax credit for low to moderate-income working families and individuals. The EITC helps you get extra money back at tax time. Who is Eligible? To qualify, taxpayers must meet the requirements below and file a tax return, even if they did not earn enough money to be obligated to file a tax return. Earned income and adjusted gross income (AGI) must each be less than: $38,646 ($41,646 married filing jointly) with two or more qualifying children; $33,995 ($36,995 married filing jointly) with one qualifying child; $12,880 ($15,880 married filing jointly) with no qualifying children. Investment income must be $2,950 or less for the year. You must have a valid Social Security Number You must have earned income from employment or from self-employment. Your filing status cannot be married, filing separately. You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return. You cannot be a qualifying child of another person. If you do not have a qualifying child, you must: be age 25 but under 65 at the end of the year, live in the United States for more than half the year, and not qualify as a dependent of another person Cannot file Form 2555 or 2555-EZ (related to (foreign earned income) How Much is the EITC Refund? The amount of the refund depends on the filing status and number of qualifying children the individual or family has during the tax year. The maximum federal credit for Tax Year 2008 is as follows: $4,824 with two or more qualifying children. $2,917 with one qualifying child. $438 with no qualifying children. For the 2008 tax year Illinois EITC is 6% of the federal EITC. What is the Child Tax Credit? The Child Tax Credit may be able to reduce the federal income tax you owe by up to $1,000 for each qualifying child under the age of 17. What is a Qualifying Child? Your child must meet the following tests: Claimed as a dependent on your tax form; Age - Was under age 17 at the end of 2008; Relationship - Is your son, daughter, adopted child, stepchild or eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these individuals; Citizenship - Is a U.S. citizen, U.S. national or resident of the U.S.; Support - Did not provide over half of his or her own support during the tax year, and Lived with you - Must have lived with you for more than half of 2007 (note that some exceptions to this criteria exist).

15 Frequently Asked Questions Page 15 How Do I Figure My Credit? If you are a computer user, use the EITC Assistant, an easy-to-use web-based tool. By answering some questions and providing basic income information it shows you whether or not you qualify for the EITC, and why. It s available in English and Spanish, Or, you can call the IRS at , visit ipaytaxes.org or talk to your tax preparer. Special rules apply for calculating earned income for members of the U.S. Armed forces in combat zones, members of the clergy, hurricane victims, and those with disability income. Don t overlook your state credit. If you qualify to claim EITC on your federal income tax return, it is likely you also be eligible for a similar credit on your state (Illinois) income tax return. What is Advanced EITC? You may prefer to get some of next year s EITC throughout the year in your paycheck, rather than wait and get EITC after you file your tax return. To get Advance EITC, complete Form W-5 and give it to your employer. Will EITC Affect My Public Benefits? Not in most cases. EITC does not qualify as income when determining eligibility for Food Stamps, Medicaid, SSI, or public housing. Can I Claim EITC For Prior Years? Yes! You can claim the credit for the past three years. Complete Form 1040X, call the IRS at or talk to your tax preparer. Can I File on My Own For Free? Yes, Free File, found on the IRS website, allows qualified taxpayers to prepare and electronically file their own tax returns for free using commercial available tax preparation software. I-CAN E-FILE is a free site for filing your federal return. Visit Illinois e-services for a quick a easy way to file your Illinois tax return. Where can I go for help with preparing my tax return or to learn more about EITC? Now, practically everything you need to know about tax preparation help and tax credits is available right on your own computer by accessing ipaytaxes.org. In addition, taxpayers can seek assistance from Volunteer Income tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs nationwide. To find the closest VITA site taxpayers can call To find the nearest TCE site call Or, visit the following websites: ww.myrefund.illinois.gov IRS Taxpayer Assistance Centers are a source of personal tax help when taxpayers believe their tax issues cannot be handled on-line or by phone, and they want face-to-face assistance. Locations are posted on IRS.gov under the "Individuals" tab. Just click the link Contact My Local Office. Where Can I Get Forms? Many post offices and libraries offer IRS tax publications, forms and instructions for pick up. Participation of post offices and libraries changes from year to year so taxpayers should check with their local community organization before making the trip. Electronic kiosks containing commonlyused forms (Form 1040 series) and tax information are available in some locations. You can also type Contact My Local Office in the search box on IRS.gov to find availability by state. All local IRS Taxpayer Assistance Centers have tax publications, forms and instructions available to pick up.