This article originally appeared in the March-April 2004 issue of the Children's Advocate, published by Action Alliance for Children.

Family Support Works

"My future is a little brighter":

Tax assistance programs boost family incomes

By Melia Franklin

Terrilynn Kopitar didn't owe any taxes for 2002-or for the previous two years. "I knew I didn't have to pay, so I didn't file taxes," says Kopitar, a mother of four in Bay Point, a working-class community in Contra Costa County. As a former CalWORKs participant turned student, she worked part time, and her income was too low to owe.

But with free tax assistance from the Volunteer Income Tax Assistance (VITA) program at Bay Point Family Service Center, a family resource center, Kopitar received an unexpected $6,600 boost: tax refunds for the past three years.

Kopitar says she "had no idea" that, as a low-income wage-earner (less than $34,692 a year) supporting one child (the others are grown), she qualified for a $2,547 federal Earned Income Tax Credit (EITC) refund and more in child tax credits.

She admits it was "hard not to go out and spend it right away-I wanted to just go shopping!" Instead, she used part of the refund to pay off $2,600 in student loans. "That was a huge ton of bricks lifted off my shoulders." Her next step is "getting my transmission fixed on my car-I've been borrowing my father's car." With the tax credit money, says Kopitar, "I'll be a lot more independent and I'm not in debt so much. My future is a little brighter."

Families: A boost out of poverty

An increasing number of family resource centers (FRCs) like Bay Point have been hosting VITA programs as part of a national strategy to help boost low-income families out of poverty through the EITC-"one of the most effective antipoverty programs available," according to Nina Goldman, service integration manager for Contra Costa County.

Unfortunately, 10 to 15 percent of eligible families don't claim the EITC-like Kopitar, they don't know about it. In Contra Costa County, some $8 million in tax credits go unclaimed each year.

"There is this huge pot of money that poor people are entitled to"-up to $4,204 for a married couple with two or more children, says Goldman, who oversees Bay Point Family Service Center and North Richmond/San Pablo FRC. The message is simple: "If you have any earnings, you may not owe, but you can get money back from the government."

Last year, in a pilot program with 25 families, Bay Point and North Richmond FRCs brought families $47,000 in tax refunds, an average of $2,000 per family. This year, Contra Costa County hopes to reach 735 families and bring in $1 million, with help from a countywide partnership and the United Way of the Bay Area's new Earn It! Keep It! $ave It! campaign. (See p. 16 for more on tax credits.)

FRCs: Building relationships

Many FRCs, like Bay Point, see the VITA program as "a step toward financial literacy. It's an opportunity to talk about asset-building, bank accounts, and free financial planning classes," says Goldman. Families feel comfortable going to the FRC for help, says Kopitar, because "they know it's a community-friendly place."

The EITC is "a tremendous draw in relationship-building for the other work we want to do with families," says Stewart Wakeling, executive director of Community Partnership for Families in San Joaquin County. Last year the partnership ran a pilot VITA program that brought 400 families about $1,000 each in refunds.

When families come in for the tax assistance, Wakeling says, "we use the opportunity to help them establish a conventional banking relationship," freeing them from costly check-cashing services and money orders. Then, "in a relational way, over time," the FRC may offer families help in going over their bills and cutting unnecessary costs. "We try not to be judgmental," Wakeling says, "or they'll never come back."

"In general, FRCs underestimate the importance of improving families' financial situations," Wakeling adds. "Re-search shows that as a family's financial position improves, the well-being of the children improves."

For Kopitar, filing her taxes "helped get me back in the loop." She has a bank account now, and this year, she'll be a volunteer tax preparer at Bay Point. "I'm looking forward to doing the same thing for another family," she says.

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VITA basics

VITA provides free, IRS-certified tax assistance at community and government sites. Call the IRS at 1-800-TAX-1040 for a site near you.

The IRS provides free training and certification to VITA volunteer tax preparers, as well as computers and software for instant "e-filing."

Volunteer tax preparers are certified by the IRS after 12 hours of classes. "Anybody who knows how to use a computer and is eager to learn can do it," says Fremont volunteer Johnny Yee.

United Way of the Bay Area provides leadership, publicity, and some financial support to VITA sites in Alameda, Contra Costa, and San Francisco counties. www.earnitkeepitsaveit.org

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What is an FRC?

The family resource center (FRC), part of an innovative strategy to promote healthy families and communities, is a warm and welcoming community hub that engages families in a variety of programs and activities that build on their strengths and meet basic needs. FRCs respond to what the community says it needs and often work in partnership with other community agencies.

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Tips for success:

Running a VITA campaign is an "incredibly rewarding, wonderful initiative," says Judy Schwartz, administrator of Fremont FRC, which ran 14 VITA sites last year. But it's also "a huge amount of work." VITA veterans advise:

• Start small: "Get your feet wet" with a small-scale pilot before launching a major campaign, says Goldman.

• Reach out early: "If you really want to get families out of the predatory financial market, you have to get to them early," says Wakeling. Otherwise many will go to tax preparation services, which charge high fees and lure clients into high-interest "refund anticipation loans."

• Work with partners: Market the service through public and nonprofit agencies, programs like CalWORKs, community organizations and events.

• Hire a coordinator: Most VITA sites hire a part-time coordinator, October through April, to recruit volunteers, work with the IRS, and coordinate community outreach.

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The research shows:

• Money matters! By the time they get to kindergarten, children in low-income families lag behind other kids in academic, social, and physical development (National Center for Children in Poverty).

• The Earned Income Tax Credit lifts more children out of poverty than any other government program (Center for Budget and Policy Priorities).

• Programs that increased families' economic resources by $1,200 to $4,000 per year (over what they had been on welfare) had positive effects on the development of children in the preschool and elementary school years (Future of Families).

• After an experiment that increased poor families' incomes by about $4,400 a year for three years, children scored as well on school tests as children from families with twice the income. Even small increases in family resources led to improvements in young children's ability to identify colors and letters and to understand more words (Harvard Graduate School of Education).

For details on sources, email aacjean@4children.org

Family Support Works! is a 6-part series supported by the Evelyn and Walter Haas Jr. Fund and the S.H. Cowell Foundation. For more information contact Jean Tepperman, 510-444-7136, aacjean@4children.org

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