Paid in Full: Using the Earned Income Tax Credit and Volunteer Income Tax Assistance Program to Stimulate Financial Planning in Low-Income Communities

Abstract:     
This paper will discuss the creation of a system-wide quality service agenda for tax preparation for low-income families, with the chief focus on the Earned Income Tax Credit (“EITC”). The EITC is an important anti-poverty measure for low-income families. Therefore its administration will have a significant impact on the financial security of these families. The EITC provides not only immediate anti-poverty relief but also capital for long-term asset planning. However, these benefits are only accessed through a complicated filing process. They often require access to sophisticated legal services that are beyond the economic reach of the intended beneficiaries. Legal services within the reach of low-income clients typically lack resources to meet the needs of their clients and lack the expertise to provide effective service. This paper proposes a model that enhances available services. This model improves the access that low-income families have to effective tax preparation and financial planning. This model supports the framework already provided by the IRS, the Volunteer Income Tax Assistance program and local community development corporations. The ultimate purpose of the model is to empower low-income families to control their own wealth planning, gain financial savvy and meet the policy objectives of the EITC.

Number of Pages in PDF File: 16

Keywords: Tax Policy, Poverty Law, Public Interest Law, Economic Development

JEL Classification: H2, K34

working papers series