Homeless workers have benefited from a federal tax credit program for low-income workers, but many may not be getting the money they are owed from the federal government, according a report released today. Due Credit reports the results of a survey of how homeless workers have benefited from the Earned Income Tax Credit program, discusses barriers homeless workers face to getting the credit they have earned, and makes recommendations as to what can be done to help homeless workers get the credit.
The Earned Income Tax Credit is a refundable tax credit which provides money back to low-income workers.
Due Credit includes the results of a survey of non-profit organizations that provided tax assistance to homeless workers in 1997. Fourteen organizations across the country provided data for a total of 235 working homeless persons. The credit meant a substantial increase in income for many:
88 homeless families received an average EITC refund of $1286
147 single homeless adults without dependent children received an average refund of $132
Studies have shown that as many as 39% percent of homeless persons have worked at some point during any given month. Yet due to low wages and the sporadic availability of work, they do not earn enough to pay for housing. The survey found that the homeless workers used or were planning to use the credit to obtain housing, transportation to look for or maintain employment, or to take other steps to improve their chances of long-term stability:
A homeless mother in Indiana used the credit to purchase a car, which allowed her to obtain stable employment.
A homeless mother in Alabama planned to use the refund to pay for a security deposit and first month's rent on an apartment.
A homeless father in California used the refund to purchase a vehicle.
But many homeless workers may not be getting the credit they earned. A 1990 study showed that between 1.4 million and 2.5 million eligible low-income families were not claiming the EITC for which they qualified. Homeless persons face several barriers to obtaining the credit:
Lack of knowledge about the credit
Lack of a permanent address where the IRS can send the refund to
Difficulty in obtaining W-2's or other forms because of a lack of a permanent address
In 1993, recognizing that homeless workers might be losing out on this important benefit, Congress included report language in the budget bill that was passed, urging the IRS to "explore the use of outreach programs that target homeless individuals and that aim to educate these individuals of the availability of the EITC."
At the press conference, the Law Center will also release a letter to the Internal Revenue Service, calling upon the IRS to conduct outreach to homeless persons, to expand the IRS' tax assistance program for low-income filers to reach more persons, and to make provisions for homeless tax filers to be able to receive their tax refunds without a permanent address.
"The EITC can provide a way out of homelessness," said Maria Foscarinis, Executive Director of the Law Center, "but only if homeless workers know about the credit and are able to get it. Homeless workers have earned this money -- the IRS should help to ensure they receive the credit they are owed." At the press conference, the Law Center also announced that, at the Law Center's request, four federal agencies -- the Department of Health and Human Services, the Department of Housing and Urban Development, the Department of Veterans' Affairs, and the Federal Emergency Management Agency -- have agreed to begin or expand outreach efforts to inform homeless and low-income persons about the credit.