Working families can benefit from a federal tax credit intended to put cash in their pockets. But millions miss out on the earned-income tax credit because they don't file tax returns.
Now, a nonprofit organization working with a longtime volunteer tax preparation program aims to help more eligible people get the credit by simplifying free, remote tax preparation for them.
Code for America began working last year with groups participating in the Volunteer Income Tax Assistance program, known as VITA, to help eligible people submit tax returns and claim the credit.
About 5 million eligible people fail to claim the tax credit annually, according to a report from the Tax Policy Center. Some people have incomes so low that they aren't required to file a return but may not realize they must do so to claim the credit. Others do file returns but don't claim the credit because of its complexity.
The average credit for a family with children was about $3,200 in 2017, and research suggests families mostly use the money to cover basic needs.
In 2020, as part of efforts to get more people to file for the credit, Code for America teamed up with dozens of VITA programs in 31 states to test a new digital tax preparation service called Get Your Refund. It expects to work with about 100 partners in the upcoming tax season, Amanda Renteria, chief executive of Code for America, said.
The trial expanded in the pandemic. Most VITA sites had stopped offering in-person help, and many people who hadn't recently filed tax returns had to register on a special IRS website to get their $1,200 pandemic relief payments.
The need for remote assistance was intense, Renteria said. In all, about 1,000 volunteers helped 30,000 people file tax returns via Get Your Refund, with those filers getting an estimated $62 million in refunds, including tax credits and the stimulus payments.
