Tax season is a time of year that for many folks will bring big refund checks and an opportunity to get started on any number of financial goals, whether it be planning a big purchase, paying off a debt or starting an emergency fund. One way to maximize the jumpstart on your goals is to make sure that you are maximizing your refund.
One particular credit, the Earned Income Tax Credit (EITC), which is a tax credit to help low and moderate income individuals keep more of their earned income, can provide a substantial credit and potentially refund. In addition to the federal credit, the District of Columbia and twenty six states have established their own EITC credits to allow these individuals to get even more of their tax dollars back. These refunds also act an important tool in lifting families out of poverty (as shown in the graph below), and can provide economic relief to many in need.
Washington, D.C. has the most generous EITC credits in the country, but still has a low participation rate among those who are eligible. In 2015, the average Federal EITC Credit in Washington, D.C. was $2,351 and the D.C. EITC Credit was $993. Those who do not claim the credit are potentially missing out on thousands of dollars.
To further assist individuals in claiming the credit and otherwise filing their taxes, there are free tax assistance sites all throughout the District of Columbia where trained tax preparers can assist individuals with completing their taxes, with services available in English and Spanish (and language line available for other languages).
A note about the author:
Since August 2015, I have been working as a financial coach out of Legal Aid to assist clients with their non-legal financial decisions. There is no one solution or approach that works for everyone, which is why the one-on-one coaching advice I provide can be instrumental in helping clients figure out what is best for their situation. If you are interested in further discussing how you can utilize your tax refund to meet your financial goals, please call or email me to schedule a free appointment. My email is email@example.com or please call 202-386-6687.