In the Media
LOS ANGELES DAILY NEWS: A nonprofit group teams up with L.A. County departments to connect people with no-cost tax preparers
03. 01. 2024
This article was original published by the Los Angeles Daily News.
When it comes to filing income tax returns, most Americans worry that they will owe money to the federal government or a state tax collection agency.
But for thousands of low-income Los Angeles County residents each year, often the opposite is true. The IRS and the state Franchise Tax Board owe them money. But due to uninformed tax preparers or because people fail to file their taxes at all, residents are unknowingly short-changed millions of dollars.
In fact, about $500 million in tax credits that L.A. County residents qualify for are left on the table each year, say nonprofit groups working to reverse the situation.
“Filing taxes and getting the refunds you qualify for is difficult and time-consuming and far too many people don’t get the cash they should as a result,” said Teri Olle, director of Economic Security California (ESCA), the nonprofit spearheading a pilot program to connect more residents with tax-return preparer groups who don’t charge for their service and get more low-income people to file.
Research has found that a significant number of low-income Californians, including a disproportionate number of Black, Latino and indigenous households, are missing out on cash payments offered through state and federal tax credits and stimulus programs, ESCA reported.
The group has a goal of connecting with 3,000 low-income families in L.A. County who qualify for tax credits and refunds through a new program called Claim Your Cash. The group is working with people who receive county services, linking them up with free tax preparers who know about the applicable tax credits that are available.
When someone gets county benefits, the county worker calls the Volunteer Income Tax Assistance (VITA) program and gets the individual an appointment — something ESCA calls “a warm handoff.”
ESCA has trained staff at the following county departments: Department of Children and Family Services (DCFS), Department of Consumer Business Affairs (DCBA), Justice Care and Opportunities Department (JCOD), Department of Public Health Home Visits Program, Aging and Disability (DPH-HV), Department of Economic Opportunity (DEO) and Department of Public Social Services (DPSS).
ESCA has also paid for and trained extra staff at the Koreatown Youth & Community Center (KYCC) in Los Angeles to connect visitors with the program. ESCA and KYCC collectively raised philanthropic funding and county funding to support the expansion of the VITA capacity.
Too many people who get some kind of county service are not claiming tax credits they are qualified to claim, ESCA reported. Some of the tax credits are so obscure not even tax preparers know about them, said Monica Lazo, Southern California program director for ESCA on Wednesday, Feb. 28.
The list includes two federal credits:
Federal Earned Income Tax Credit (EITC) — provides up to $7,830 depending on income and family size. Taxpayers and any qualifying children need valid Social Security numbers. Also, taxpayers with no children must be between the ages of 25-65.
Federal Child Tax Credit (CTC) — provides up to $2,000 per child. The qualifying child must have a Social Security number and the number must be issued before the due date of the tax return. Parents with an Individual Taxpayer Identification Number (ITIN) may claim the CTC as long as the qualifying child has a valid Social Security number.
The California credits include:
California Earned Income Tax Credit (CalEITC)— provides up to $3,529 this year, either as cash back or reduction in taxes owed, depending on income and family size. Must earn less than $30,950.
Young Child Tax Credit (YCTC) — can get up to $1,117 per household, either through cash or a reduction in owed taxes. Applicants don’t need a Social Security number. “Because people did not know about it, not many people claimed it last year,” Lazo said.
Foster Youth Tax Credit (FYTC) — provides up to $1,117 for transitioning foster youth who were ages 18 to 25 at the end of the tax year. “Last year, this credit (FYTC) went into effect. And last year we had a low number of folks claim it,” Lazo said.
If some people are qualified for multiple tax credits, the combined amount coming back to them could add up to as much as $10,000, Lazo said.
But even if it is, say, $2,500, that can be significant to low-income families. “When you are living paycheck-to-paycheck, it makes a big difference,” Lazo said.
She said studies have shown that that low-income families return 75% of their tax refund monies to the local economy.
Lazo said there are many myths surrounding income tax returns held by low-income families.
First, many believe that filing an income tax return and claiming these tax credits will cut off other income sources. “Folks think ‘If I get tax credits, then I will not continue to get my (other) benefits.’ This is not true,” Lazo said.
And some folks who are undocumented and only have a Tax ID number are afraid to file because they fear a visit from immigration officials. But Lazo said that they show the government they are participating in the economy, by filing their tax returns or paying owed taxes.
Some do not file returns because they say they’ve earned too little income. That is not a disqualifier, Lazo said. “Some people I’ve talked to think they just drive Uber and don’t qualify. But actually they do.”
They are setting up a new location at the Department of Consumer and Business Affairs offices in Whittier later this month, she said. “We are in partnership with different county agencies. We have buy-in from them.”
“If you live outside of L.A. County we will not turn you away,” Lazo said. “People for example who live in Riverside County but commute to L.A., they may want to get their taxes done after work.”
To get more information, call the Claim Your Cash Hotline at: 1-888-844-3276 or visit: www.claimyourcashla.com to connect to locations all over Los Angeles County where ESCA is partnering with VITA tax preparers.