Spring 2003

I-CAN Earned Income Credit Electronic Filing: Putting Money Back into Poor People's Pockets
by Gabrielle Hammond

On the heels of welfare reform, putting money back into the pockets of our client community is a priority. And, while most low-income families would not turn away a check for $4,140, many unknowingly do just that by being unaware of the Federal Earned Income Tax Credit.

Referred to as EITC or EIC, the Federal Earned Income Tax Credit is a $31 billion program. It can return as much as $4,140 a year to a low-income working family, which dramatically impacts the lives of our clients. The average return is about $1,600. EITC is a credit. This means it returns more money to the low-wage earner than they put in through taxes withheld. To get it, a person simply needs to file their Federal tax return and the Earned Income Credit worksheet. It is important to note that low-income earners who did not claim the EIC in years past are entitled to file or amend prior returns for up to three years, and receive retroactive EIC. This potentially enables low-income tax filers to receive up to $12,000 at one time, assuming they have never filed for this credit and were eligible for it for each of the last three years.

For those who do claim this credit, the benefits extend far beyond one individual or one family. Statistics show that 80% of the income credit refunded to the family is spent within the community in which the low-income family lives. Generally, the money is spent on rent, utilities, and food and household products from community-based stores. Despite the potential windfall promised by the Federal EIC for communities and low-income families, billions of dollars are uncollected annually by eligible families and individuals. Many individuals do not file because they do not know about the credit. Many who do file often fall victim to high-priced "Refund Anticipation Loans" (RALs), commonly offered by most commercial tax preparation offices. While these loans speed an advanced payment to a worker by a few weeks (for workers who do not electronically file), the annual percentage rate on the advanced refund ranges from 100% to 700%. Persons who affirmatively answer the question, "Would you like your money right away?" unknowingly lose badly-needed funds.

Introducing I-CAN! Earned Income Credit (I-CAN! EIC)

I-CAN! EIC is a web-based application that helps low-wage earners file and complete their Federal tax forms for free. It has been created with funding by the Legal Services Corporation and is certified by the IRS as an online tax tool. It completes Federal tax forms for anyone eligible for the Earned Income Tax Credit and allows users the option to electronically file their return. I-CAN! EIC also does the California state returns for users, when appropriate. A user does not have to look at tax forms or know before beginning if they can claim the EITC.

How I-CAN! EIC Works

It's easy: www.icanefile.org!
I-CAN! EIC is offered in Spanish, Vietnamese, and English. It uses a video guide to read simple questions that are on the screen to the user. The application has been translated at a fifth grade literacy level. The client answers the questions using a keyboard, at their own pace. When all of the questions are answered, completed tax forms are available for printing and electronic filing. If someone is not eligible for the Federal EIC, the I-CAN! EIC system will "exit" a user and link them to a site that tells them the volunteer tax preparation site nearest them.

A National Network

While I-CAN! EIC is a great web tool for our client community, its success will be rooted in the partnerships created around the country with programs that promote the service to its clients. To date, the I-CAN! EIC network involves 55 programs across 19 states. Each program reaches hundreds or thousands of clients who could benefit from this credit. Partnering programs have committed at various levels: Some programs are putting the link to the web application on their site. Others are engaging in outreach and publicity campaigns about the EIC in their community and promoting I-CAN! EIC. A majority of programs are offering a computer workstation in their offices for clients to come in and access the system. A few programs are integrating I-CAN! EIC within their own client delivery systems by putting messages for clients to hear about I-CAN! EIC on their telephones while the client is on hold. Additionally, they are training their staff to route clients to the system even though the staff may be helping them with another social or legal matter.

This is the first national network created on behalf of low-income clients to help them put money back into their pockets. To support the national network, the Legal Aid Society of Orange County has developed trainings for programs to attend, which are offered "virtually" via web conferencing and are an hour and a half in length. Additionally, we have put together professionally-made Public Service Announcements (PSAs) that we send to each partner for them to use on their own radio and television stations. Each PSA has a spot where the program's name and number is advertised for more help. The spots inform clients in an easy way about the EITC, e-filing, and the I-CAN! EIC program.

How to Partner

To partner, a program leader can contact Gabrielle Hammond (see below). Alternately, a program can go online and register themselves as a partner. They will then receive additional information on trainings and a Memorandum of Understanding that needs to be signed. More information about the project can be found at www.icanefile.org/programs.

Gabrielle Hammond is the project director for the National Technology Assistance Project (NTAP), which is a project of the Legal Aid Society of Orange County. 310-586-9664

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