Free tax preparation helps low-wage workers build financial stability, boosts local economy
Nearly $ 21 million in federal and state income taxes was returned to Maine state workers during the 2015 tax season as a result of free tax preparation services offered by local IRS-certified volunteers, according to a new breakdown of national IRS data compiled by the Corporation for Enterprise Development (CFED). The data shows that tax preparers at Volunteer Income Tax Assistance (VITA) sites across Maine helped more than 20,000 workers make the most of their returns last year.
VITA programs offer low-wage workers a free alternative to more costly, and often predatory, tax preparation services. The sites are IRS-sponsored and closely monitored by the agency, giving them a far lower error rate than many self- and paid-tax preparation services. CFED experts found that VITA programs across the country had a near-perfect accuracy rate of 94% in 2015.
The sites also help raise awareness of the Earned Income Tax Credit (EITC) to ensure eligible workers receive the credit at the correct amount. Nearly $ 5.6 million was returned to Maine state workers through the EITC, according to the data compiled by CFED. The EITC is widely regarded as one of the nation’s most powerful anti-poverty programs, yet one in every five workers eligible for the credit does not claim it.
“Each tax season, IRS-certified volunteers file returns with remarkable accuracy for millions of low-wage Americans, all without charging them a single dime,” said Andrea Levere, president of CFED. “VITA is an invaluable program for helping low-wage workers and their families build financial stability and save for the future.”
“The free tax prep program has really helped us, and the volunteers are great! We heard about the Rainy Day Savings and Family Development Account and wanted to apply right away in order to benefit from these matched-savings programs. We hope to use these programs to help build up our emergency fund and to help save for a house! This is a great way to pursue your financial goals and get some help along the way!” said Jeff and Anna, CA$H Maine tax filers. Visit cashmaine.org for more information about matched-savings accounts.
Nationally, volunteer income tax preparers helped return $3.98 billion in federal income taxes to those with modest wages this past tax year, benefiting 3.3 million Americans. CFED has designated March 15 as National VITA Awareness Day and is spearheading events across the country through its Taxpayer Opportunity Network, a coalition of individuals and organizations providing free tax preparation. VITA sites are generally located at community or neighborhood centers, libraries, schools, shopping malls and other convenient locations. Local taxpayers can find their nearest site by visiting the IRS’ VITA Site Locator, found here or find a CA$H Maine site here.