What would you do with an extra $2,500 in the bank? Put a down payment on a car? Take a vacation? Squirrel it away to pay for college? Just, have it?
You could be doing any of those already—at least if you are one of the nearly 226,300 Philadelphians who qualify for an Earned Income Tax Credit (EITC), a federal rebate program that puts money in the pockets of working Americans when they file their federal income taxes. Part of a 35-year-old program, the money is granted to anyone making between $21,430 (for a single person) and around $57,414 (for a family of three filing jointly)—a range that includes way more people than actually apply for the funds. You can see a more detailed view of income limits here.
In Philly last year, over 186,300 people took advantage of the EITC. Another 40,000 who qualified did not, leaving about $107 million with the federal government that could have been spent here. While the average cash back is $2,500, the credit ranges from about $500 to $6,550.
“It can really be a lot of money,” says Breslin. “We’ve seen stories—someone finds out they’re qualified, and can get four years of EITC, and they’re buying a used car, paying off old bills, really making a difference in their finances.”
For a sense of what that means consider this: A single parent of two who earns $$47,915 a year could get as much as $5,980 back when she or he files their taxes. Plus, if you qualified in the past three years and didn’t apply, you could potentially see a cash bump to the tune of (on average) $10,000.
“It can really be a lot of money,” says Frank Breslin, Philly’s revenue commissioner. “We’ve seen stories—someone finds out they’re qualified, and can get four years of EITC, and they’re buying a used car, paying off old bills, really making a difference in their finances.”
How to get your Earned Income Tax Credit in Philly
As in the past several years, Breslin this month is kicking off the City’s annual You Earned It campaign to spread the word about EITC to every qualifying Philadelphian, and to help them fill out the paperwork needed to get their money by the April 18 tax deadline.
The Revenue Department’s You Earned It Philly page has all the information you need to get your Earned Income Tax Credit this year, including a calculator that will estimate your credit and links to where you can get free tax help. For those who need help, the Department is directing people to myfreetaxes.com, where you can connect with live or virtual tax professionals. If you feel comfortable doing your taxes on your own, you can download the IRS’s free forms here.
“The number of people who file for EITC has been rising,” Breslin says. “But every year, there’s new people who qualify—people joining the workforce, people who have an increase in family size, people whose income has been reduced and for the first time qualify. The population is constantly changing.”
History and Impact of the Earned Income Tax Credit
The EITC feels like a throwback to a time when the federal government seemed, truly, to be looking out for working class Americans. It was first signed into law by President Ford in 1975, then expanded in 1986, under President Reagan, who considered it “the best anti-poverty, the best pro-family, the best job-creation measure to come out of Congress.”
He may have been right: Multiple studies from both sides of the aisle have shown EITC is the single best government-sponsored poverty relief program that exists.
That’s because many working Americans walk a precarious knife’s edge when it comes to financial stability. More than 75 percent say they live paycheck to paycheck, putting them one catastrophe—an illness, a broken appliance, an unexpected move—away from insurmountable debt or even poverty.
Around 82 million Americans work jobs that pay by the hour, with nearly 2 million earning at or below the federal minimum wage of $7.25 per hour—a number that hasn’t changed since 2009. A full-time minimum-wage worker earns $15,000 a year—far less than the minimum needed to qualify for EITC.
“One of the messages we try to get out is, If there’s a challenge in paying your taxes, reach out. We have a lot of programs, lots of ways to get you in compliance,” says Breslin.
As a decades-long veteran of Philly’s Department of Revenue, Breslin has spent most of his career ensuring the City receives the taxes that it’s owed. This is a different side to the tax collection agency: “We take seriously the mission to provide assistance to taxpayers and residents,” Breslin says.
That includes spreading the word about and making it as easy as possible to get EITC credit, but also a number of other local programs, including Homestead Exemption, which gives homeowners up to $629 off their property taxes; Senior Citizen Real Estate Income Tax Freeze, which lets residents over 65 lock in their property tax at its current value; and the TAP program that pro-rates water bills for low-income households.
And, Breslin says, the Department can do even more: “One of the messages we try to get out is, If there’s a challenge in paying your taxes, reach out. We have a lot of programs, lots of ways to get you in compliance.”
Philadelphia, as Breslin well knows, is the big city with the highest poverty rate in the country. It is also a city with hundreds of thousands of low- and moderate-income workers, those whose jobs don’t earn them enough to reliably stay afloat.
It shouldn’t be that way. People who work full-time should know they can support their families, save for college, stay in their homes. That requires Philly to greatly increase the high-paying jobs available to Philadelphians—and it may require a change to the way we do business here, and in America.
Will government step in to push that change along? Who knows? In the meantime, though, there’s a relic of a government program to help out.
“We encourage families to work, but there are people out there really being challenged in their expenses,” Breslin says. “This is a way of putting money back into their pockets. It can be a life-changer for some people.”
Header photo by Alexander Mils / Unsplash