Community Investments Vol 21, Issue 2
Tax Time as an Asset Building Opportunity: Assessing the Potential
Tax time provides a unique opportunity for people to reflect on the past year’s income and expenses, take advantage of tax incentives, and make financial plans for the future. For low-income families in the United States, tax time is also an important window for the delivery of asset building products and services. The Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) may produce significant tax refunds, in some cases more than 15 percent of annual income in a lump sum, thus providing a ‘teachable moment’ that can help to encourage saving and financial planning. Community-based free tax preparation programs, such as the Internal Revenue Service’s (IRS) Volunteer Income Tax Assistance (VITA) sites, contribute to this mission and complete approximately 1 million tax filings per year.
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