It’s hard to overstate the importance of filing a timely and accurate tax return with the IRS, but many low-income individuals and families are often hard-pressed to afford good tax advice. Yet according to the community organization Chelsea Neighborhood Developers (CND), on average, IRS tax refunds represent 9 percent of low-income households’ total income for the year.
Because people of all income levels need quality tax assistance, the CND provided free tax preparation services to 700 residents of Chelsea and Revere for the third year in June. The program, which is run by CND with support from the IRS, the United Way of Massachusetts Bay and Merrimack Valley, and the Boston EITC Coalition, is estimated to have returned $1.3 million from the IRS to the hands of low-income residents.
Experienced, trained volunteers provide the tax preparation services with a strong focus on ensuring that each client receives every tax credit and deduction for which they are eligible. For example, many low-income families qualify for the Earned Income Tax Credit, one of the few tax credits that results in a refund even if the filer’s tax liability is otherwise zero.
Helping residents get their full tax refunds helps stimulate the local economy
One of the chief benefits the CND touts for the program is its ability to create an economic stimulus in the community. For example, if each client had been willing and able to pay a professional tax preparer, the average cost would have been around $150 each. That $150 savings is immediate — clients don’t have to wait for it in the form of a refund — and the money stays in the community.
In addition, offering quality tax assistance probably helps these local residents get larger tax refunds than they would if they tried to file their taxes on their own. Since their federal tax refund is such a large portion of each family’s budget, increasing it can have a very real impact on the family’s overall income. The average refund among CND clients is about $1,800, and that money is typically spent right in the local community.
CND’s Director of Asset Development says the service is not only good for the community as a whole but is an increasingly trusted resource for individuals and families.
“Our tax preparation program has grown 218% since we began offering it in 2007,” she said. “The growth is partly due to the current economy, but we’re proud to see residents returning to us each year, knowing that they will receive every dollar they deserve.”
Source: The Chelsea Record, “Tax Program Refunds $1.3 Million,” June 3, 2011