For families living in poverty, a simple change in how they do their taxes could make a huge impact on their year-round financial stability. However, one in five eligible people know nothing about it.
Single father of five Elliot of Waukesha was struggling. He dreamed of owning a home for his family, but was barely scraping by each month. “Even paying to getting his taxes done each year was a strain on the budget,” remembered Elliot.
A Waukesha native, Elliot learned that La Casa de Esperanza, a United Way-funded partner, ran a Volunteer Income Tax Assistance (VITA) site where he could file for free and he jumped at the chance.
When families are financially stable, the whole community feels the positive effects. United Way supports more than 50 local programs that help families build a financially secure future.
Last year, thousands of local people accessed United Way-funded financial stability resources like free tax preparation services.
Elliot met with a volunteer tax preparer who helped him work through his taxes. They soon discovered that Elliot was eligible for both the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Together, these tax credits greatly reduce poverty for working families. In 2017, these working family credits lifted an estimated 9.4 million people in the U.S. out of poverty, including 5 million children (https://www.eitc.irs.gov/eitc-central/about-eitc/about-eitc).
For Elliot, these tax credits were life-changing. “With this refund, Elliot was able to pay down more than 70% of his debt and even get ahead on his monthly bills,” said Gina Sanchez, manager of Financial Stability programs at La Casa de Esperanza.
La Casa also helped Elliot create a plan for using his refund in a smart way. “A tax refund plan has three parts,” said Gina, “paying down debt, saving for the future, and putting a little aside to do something fun for yourself or your family.”
Of the individuals who participated in United Way-funded financial capabilities programs like this one at La Casa de Esperanza, 99% understood the importance of saving money for the future and 97% made progress toward their personal goals.
In 2018, La Casa served over 1,700 people through their VITA tax preparation program, generating $2.8 million of tax refund dollars that went back into the community.
Grateful for the help he received, Elliot is paying it forward. A shelter advocate at Hebron House of Hospitality, a Waukesha-based homeless shelter also funded by United Way, Elliot directs his clients to La Casa de Esperanza to complete their taxes and go through the Financial Stability program.
Following the advice from Gina at La Casa, Elliot includes his family in planning for their financial future. Says Elliot, “we are working together to be able to own our own home…they really want their own rooms!”
As for the “fun” part of his tax refund plan:“We are going to the water park,” says Elliot, “the kids don’t know about it…I’m surprising them. We are going to have so much fun!”
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