About 20,000 people in D.C. who come from low-income families are not able to benefit from Earned Income Tax Credit (EITC), a subsidy that can bring incentives for work and increase their purchasing power.
According to Joseph Leitmann-Santa Cruz, who’s the associate director of the nonprofit Capital Area Asset Builders, thousands of eligible D.C. residents fail to claim benefits from EITC, leaving about $40 million unutilized every year.
In the 2014 tax year, Washington, D.C. had the lowest participation in EITC in the United States, according to the latest data from IRS. While the national average is 79 percent, it is 71.9 percent for the district.
“There is this general sense that if somebody earns less than $20,500 as a family, or as a married couple, there is no need to report an income form to the IRS — and that is true. But while many low-income residents don’t owe money to Uncle Sam, Uncle Sam does owe [them] a lot of money,” said Cruz.
EITC participation is hampered by many barriers in D.C., including lack of awareness and education, and unawareness of the benefits of filing tax returns which can bring money in return, Cruz explained.
“Anything associated with the tax code is extremely difficult and very complex, so people tend to shy away,” he added.