As America Saves week comes to an end in the midst of tax season, we thought we’d take a look at how people can save a portion of their refund. This year, Illinois’ State Earned Income Tax Credit (EITC) is larger than in previous years. A qualifying family of four receives a tax credit of $5,759 this tax season from their combined Federal and Illinois EITC. Add $1,000 per child from the Child Tax credit, and $7,759 in refundable tax credits can mean a big difference for working families.
The EITC and Child Tax Credit are powerful anti-poverty tools. The EITC, created in 1975 has been enhanced over and over for good reason. In 2010, the EITC, combined with the refundable portion of the Child Tax Credit, lifted 9.2 millions people out of poverty.
Unfortunately, many Illinois residents fail to claim these important tax credits. Organizations can access EITC Outreach tools that will help facilitate easy outreach in your communities. There are also resources available to help people save those tax credits. Here are 6 ways to ensure a family’s tax refund goes further:
- Find a Free Tax Preparation Site – This is a great way to start! Using a Volunteer Income Tax Assistance (VITA) site can save those in your communities potentially hundreds of dollars on tax preparation costs. VITA sites are staffed with volunteers that help prepare taxes just as a storefront tax preparation site would with one notable exception – it’s free! To locate a VITA site, use the Find a VITA Site Near You tool.
- Get Banked – It’s estimated that unbanked consumers spend, on average, over $800 at check cashers each year. Opening up a checking account at a bank or credit union not only saves money, but it also allows hassle free direct deposit of paychecks, tax refunds, and certain public benefits. For organizations in Chicago, you can learn more about low cost checking accounts available through Bank On Chicago Financial Partners.
- Start an Emergency Savings Fund – Emergency Savings is a financial life preserver that allows a family to weather life’s difficult surprises like job loss, unexpected medical care, or unexpected car maintenance. According to the Illinois Poverty Report, a family of three needs $4,632 in savings to subsist at the poverty level for at least 3 months if their income suddenly stops.
- Save for College – A child that has a savings account in her or his name is 6 times more likely to go to college. A parent or grandparent can open up a 529 Children’s Savings Account through Illinois’ Bright Start program with an initial deposit of only $25.
- Build your Credit Score – Unfortunately, credit scores can have an impact on everything from your ability to secure housing, employment and safe loans. Local programs exist that help people build their credit scores while developing savings behavior.
- Just Save to Win – D2D Fund is offering a sweepstakes prize where if someone saves at least $50 of their refund they become eligible for $250 in weekly prizes or a grand prize of $25,000.
For more resources on tax time innovations, check out the Opportunities At Tax Time Presentations from our 2012 IABG Conference.