When a Job Doesn't Guard Against Poverty, Tax Credits Help
This week, many folks will be scurrying to finish up their taxes, but what many don't know is that for some low-income families, the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) boost household earnings and lift millions of people out of poverty each year.
The Earned Income Tax Credit is a refundable tax credit that supplements the wages of low-income workers. The more wages people earn, the more benefits their families receive until a certain point when the benefits begin to decline and finally disappear. People apply for this tax credit when they complete their income tax returns. In 2010, this credit lifted 5.4 million people out of poverty — including 3 million children.
The Child Tax Credit provides financial support for working families with children. The credit is available for children under age 17 to families earning at least $3,000. Families can receive a refund of 15 percent of their earnings above $3,000 up to $1,000 per child. The CTC is a partially refundable tax credit families apply for when they complete their income tax returns. In 2009, the CTC lifted 2.3 million people, including 1.3 million children, out of poverty.
Millions of Americans continue to feel the effects of the recession — and an alarming number are poor and hungry. Nearly one in six people lived in poverty in 2010 ($22,113 for a family of four), including 22 percent of children and more than one in four children under age 5. More than one-third of the U.S. population was poor or near poor in 2010 (living below twice the poverty level).
Unfortunately, a job doesn’t guard against poverty. In 2010, 10.7 million people with jobs lived below the poverty line. A full-time minimum-wage earner makes only about $14,500 a year. We need a growing economy, more good jobs, and measures—such as these tax credits—that ensure working families can support their families.
When times get tough in low-income households, the food budget is usually the first thing families cut. We can’t end hunger as long as people lack the financial resources they need to put food on the table. Join us this week as we learn about the Earned Income Tax Credit and Child Tax Credit, and call on Congress to create a circle of protection around critical tax credits for low-income working families.
Photo caption: Heather Rude-Turner depends on the Earned Income Tax Credit (EITC) to help support her family: Mark Diamond, 32; Naomi, 5; and Isaac, 3. They live in northern Virginia, where Heather works as a teacher at a Child Development Center. Mark drives limos and works in construction. Heather recently graduated from Kaplan University with a B.S. in child psychology. She would like to become a school teacher. Photograph by Laura Elizabeth Pohl
TrackBack URL for this entry:
Listed below are links to weblogs that reference When a Job Doesn't Guard Against Poverty, Tax Credits Help:
Get updates on issues and actions to take on behalf of hungry people.