Many San Diego Low Income Families Missing Out On Tax Credit
April 1, 2013 12:35 p.m.
Raphael Tulino, spokesman, Internal Revenue Service, San Diego
Shaina Gross, MPH/Vice President of Impact Strategies and Mobilization, United Way of San Diego County
Related Story: Many San Diego Low Income Families Missing Out On Tax Credit
ST. JOHN: You are listening to Midday Edition here on KPBS. I'm Allison St. John in for Maureen Cavanaugh. One of the most shocking trends in our society today is a growing gap between rich and poor. Some estimates have the one top percent of the population owning 40% of the wealth. It's the American way to encourage entrepreneurs and the political battle is raging right now over whether the rich should contribute more as their fair share. Meanwhile at the other end of the spectrum tax policy is one of the most effective ways of protecting low-income families from falling into total poverty but millions in tax credits go unclaimed in San Diego. So with two weeks to go till the filing deadline here to talk to us about this are my guests Raphael Tulino, a spokesperson for the IRS in San Diego good to see you again
TULINO: Hi, Allison. Thanks for having me.
ST. JOHN: And Shaina Gross who is Vice President for Impact Strategies and Mobilization for the United Way San Diego. Thanks for coming in, Shaina.
SHAINA GROSS: Thanks for having me.
ST. JOHN: Let's start with you Raphael. Before we get to tax credits let's talk briefly about tax refunds everybody's talking about those tax refunds have apparently been delayed in recent years. Is that likely to happen again this year?
TULINO: Your average refund is getting to most taxpayers in about 10 to 21 days. The quickest way to get it is e-file and choose direct deposit in terms of getting it to you truthfully about 80 to 85% get refunds actually coming back so a lot of money goes back to taxpayers and certainly this year we had a late start with legislation we are trying to send refunds out that are only sending out to taxpayers legitimately requesting based on the information on the returns i.e. preventing fraudulent tax refunds and such from going out the door so we have some resources there and we want to make sure we are providing accordingly.
ST. JOHN: Have you had to add resources because everything was pushed to the last minute with all the changes?
TULINO: We had a late start and we can only administer the law as written we have a lot on 2013 when it was actually a enacted we had to ramp up that as soon as we could we had the January 30 deadline beginning to get one I should say is coming up in two weeks to process return so we had a little bit of a late start and like I said the refund we understand the issue where a lot of folks maybe are seeing a little more time in terms of the refund getting to them than normal.
ST. JOHN: Will you give us an estimate?
TULINO: 10 to 21 days for most but there are some that might be getting longer and that's because we are trying to strike a balance in terms of returning refunds to those who are legitimately requesting them.
ST. JOHN:. Income tax credit is not technically a refund and a lot of low income people think that they have not earned enough for a refund they do not realize that this is not a refund. Explain to us what the earned income tax credit is.
TULINO: EITC is a nonrefundable refund which means if your taxes have been reduced to zero you get the rest of it in the form of a refund in terms of what your tax liability tax liability zero your EITC can significantly boost your income EITC was created back in 1975 and it was basically created as an offset for Social Security or FICA taxes at the time and it administered and continues to be administered to the tax code and legislation with inflation adjustments in the such every year increases in the value of it really is more of a family credit but individuals can claim it as well but certainly the American recovery really, RRNA of 2009 really made a little more robust than it used to be and now the family with three or more children can top out at just under $5900 in terms of the amount of credit they can claim based on their income. The income maxes out at just one $50,000 in terms of how much you can get. It's like a statistical bell shaped curve. The most amount you see our families two, three or more income somewhere around $12-$20,000 and with all the money given out as you said before a lot of it is left on the table and we encourage a lot of folks to take it last year it was over half 1 billion or 570 million if I remember right claim in San Diego County in aggregate.
ST. JOHN: The billing was claimed in San Diego alone, how much was left on the table?
TULINO: About 20% or so, one in five eligible taxpayers families do not claim it and that's such a great reason why we are here to offer that information and make folks know or let them about it.
ST. JOHN: These are families of course that really need the money.
TULINO: If you're eligible and you qualify for it please take advantage.
ST. JOHN: Shaina, I read a report in 2010 more than 1 billion was left on the table statewide by families who just did not know that this, what you find with your, you are working with groups to sort of get the word out what are you finding in terms of why people don't apply for this?
GROSS: A lot of people don't know about the credit or are unsure about how to claim it. In addition I think that people you know taxes are intimidating and so people don't always want to ask a lot of questions or diving but we have a large population here in San Diego of people who are working hard but falling short and that is the essential population that would be eligible for something like this. So we have a partnership of over 20 different agencies that have over 100 locations in San Diego County where you could get your taxes done for free.
ST. JOHN: Now, sometimes people do not come to get help for the taxes because it costs money, disunited will have a program to help people and what do they do to help people qualify
GROSS: There is no cost for the tax-preparation services throughout the hundreds of locations throughout the county it is completely free and what we know is that individuals around the 50,000 mark are eligible for income tax credit even if the claim turns out not to be eligible we will still do the taxes for free so last year we were able to do over 23,000 tax returns at the 100 locations in about 5500 of those were eligible for the earned income tax credit.
ST. JOHN: When you talk to the families, what do they say they do with the money because we are talking about significant sums, 5000, 6000.
GROSS: The average earned income tax credit last year was around $1800 per, but certainly we have families that are getting almost $5000 and you can also retro file for three years previous and many families are getting a pretty large check. What we hear is that the majority 51% are using it to pay bills and that make sense because as we know it's really hard to make ends meet so we have things that are lemming that you've been putting off and discredit could be an opportunity to get on top of those. In addition a lot of the claims are using them for savings. So 15% of clients are putting their money into savings and when we asked them 83% of them have less than $500 in a savings account so this is a pretty significant boost to that, and to financial stability.
ST. JOHN: 15% putting into savings so you still have 85% who are using it
GROSS: About 51% paying bills 15 for savings, another 10% on education, another 10% on buying a car.
ST. JOHN: Which, many cannot afford one.
GROSS: Absolutely and we know in San Diego that's a challenge to stability. So really the credit is great because it is supporting families and individuals who are working and giving them the extra boost that they need on the path to self-sufficiency.
ST. JOHN: I spoke to a couple last year who said that probably without it they would be homeless at this point because they fall behind every month of the year they fall behind little by little until there are a couple of thousand in the hole and if they didn't have the tax credit to look forward to they could be evicted and even if you not end up being eligible for larger on average getting your taxes done costs about $200 so to at least save that we know that last year received 23,000 people the $200 fee by going to a paid preparer because they were able to use the free tax prep sites.
ST. JOHN: A family of three and $50,000 income would qualify if you have one kid, is it less?
GROSS: It is sort of a scale on the less money you earn and the more children you have, the more your credit is going to be.
ST. JOHN: Rafael, you mentioned 5900 is the top?
TULINO: 5891 being the maximum amount for 2012 tax year, last year, I said it is around $2000 for the average EIT see return in terms of the amount coming in and you can go back I'm glad you mentioned you can go back and file an amended return going back three years to triple that if you haven't claimed in previous years and a lot of folks do that.
ST. JOHN: Is that less than previous years? Has the tax law change this year to reduce the amount
TULINO: It has increased it, if anything else, increased as of the law in 2009 made it more robust because added three or more children which took it over there at 1591 for this year so going forward actually it is more lucrative if you have one child I think it maxes out at 17 understand two children maxes out somewhere and 3500 or 4000. Three children, at that point definitely it is geared more for families as opposed to individuals I think the max individual credit is 475.
ST. JOHN: Of course you have to be earning.
TULINO: There are qualifications, earned income is one of them and there are other qualifications if you go to the IRS website we have an assistant. I can help you if you want to look to be sure and really as Shaina said really critical volunteer sites that are up and running that help taxpayers get help, let alone
ST. JOHN: Because in the current economy a lot of people cannot get a job they are not earning in the first place I guess unfortunately this program is not going to help them.
GROSS: No it's not one of the things we did learn is that certain populations have a small amount of income and are hard to file taxes because their income is so small, but they may actually still be eligible for the earned income tax credit so in the last years one of the things United Way has done is reach out to people with disabilities because that population tends to work part-time so he worked with the goodwill as our partner and they have a lot of employees that are working a small amount, a few hours here and there that I'm making enough that they have to file the federal tax return but if they did they would be eligible for the earned income tax credit.
TULINO: And on base, to we work the same kind of thing volunteer sites on bases around here Miramar, Pendleton and such to help further free tax-preparation and EITC for example if you are a military member and your own income is nontaxable combat pay that can be counted toward earned income tax credit so that would be, even though it's not taxable earned income theoretically would still be able to count that. I'm just making mentioned that because it's indigenous to where we live and military folks have a whole lot of special laws that exist in that fact, making that is important as well as people with disabilities to further this.
GROSS: Particularly in San Diego
TULINO: Hence the amount of money that was given out 507 million last year you can see how much how much benefit that infusion of federal dollars come into play.
ST. JOHN: What about a family who might be feeling I have not filed for too many years and they are anxious and do not want to come in and find out what the bitter truth is
GROSS: At some point you have to do it. Many of our sites are able to help with back filing and we also have partnerships with Legal Aid Society who is able to help with tax filings that maybe have more little bit complications to them so we have partners that can help you with your retro filing of the past few years if you did not file or if you have the money and that's why you've been avoiding filing Legal Aid can also help in setting up some pay schedules and things.
TULINO: And those are part of the low income tax credits and grants that provide that service for those who are low to moderate income brackets.
ST. JOHN: You know, gosh more and more of us are falling into the low to moderate bracket income these days because in San Diego they offer paid jobs are the ones that are not so many and it is so expensive to live here, so where would people find one of these clinics. Where could they start to find one of the clinics to get help?
GROSS: You could go to the United Way website there are a couple options, you can go to the United Way website, you can call 211 they have a list of all the locations and the other thing I want to add is we have a new service this year where if you are just a little computer savvy if you do e-mail or text message there is a website where you can file your own taxes and I know that can sound intimidating for some people but for individuals with a household income of 57,000 or less you can go to myfreetaxes.com/San Diego and file your taxes and it kind of walks you through asking questions and making sure that you get all the credits for which URL about so if you don't have time to go into a tax site although we have night and weekend hours you can also go to the website.
ST. JOHN: My free taxes.com. Okay so now Raphael, is there any chance that sequestration might affect this? I mean if we are cutting across the board might some of the tax credits, tax things be affected this year? For anyone
TULINO: No, we are continuing to administer taxes and process as usual and to do what we can to make sure we do that for the taxpayer with the least person burden possible to the taxpayer we are continuing to roll on
ST. JOHN: So we don't have to worry about the tax benefits being affected by the cuts?
TULINO: We are processing and moving on the best we can as I mentioned earlier based on the leadtimes, and thus giving going on that.
ST. JOHN: Shaina one of the things is when people come in and find they are eligible for this my money and say I'm going to file how come I didn't know about this, are you finding that is sort of opens them up to other things they become eligible for?
GROSS: Absolutely and many of the clients are eligible for the tax tax credit are eligible for the child tax credit or even other public benefits. Cal fresh formerly known as food stamps WIC, Cal works, so in partnership with County of San Diego we have actually, San Diego State University and other local universities have interns at the sites who can screen people for public benefits. So while you are there you have all the tax information, income information which is rare that you are, carrying that around while you're waiting for your tax prepare you can screen for other benefits you might be eligible for and help you apply.
ST. JOHN: We have 30 seconds, Rafael for people who know they are not going to meet the deadline...
TULINO: Perfect. I was going to mention the credits, but by all means the extension essentially the time to file is October 15, but it gives you an extension to file, not necessarily to pay if you cannot fall paid to file, they something that the IRS know and how do you get the extension two ways electronically or little piece of paper really easy quarter page form you can fill out but take the time if you need it that way you find in active fraternity or two as we have been offering here.
ST. JOHN: You don't get the credit really but you do have to pay on time
TULINO: Most of us get a refund by the way. A lot of money goes back to taxpayers field the way to do that is file a return you want to get the accurate return and you don't want to miss out especially for EITC do it right the first time and take your time on it.
ST. JOHN: Great, thank you so much for filling us in Rafael Tulino, spokesman for the IRS. Thanks, Rafael.
TULINO: You're welcome
ALLISON ST. JOHN: And Shaina Gross is Vice President with United Way of San Diego's Impact Strategy and Mobilization. Shaina, very nice to have you in the studio
GROSS: Thanks for having me.