"The EITC Has Been a Huge Help"

Photo by Flickr user 401(k) 2013

When Alexandria, Va., resident Ayana Edwards first learned that the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) could be in jeopardy during fiscal cliff negotiations in Congress, she prepared to face chaos.

Edwards, who works in human resources, knew that if those refundable tax credits were reduced, the employees at her company who count on getting larger tax refunds thanks to the EITC and CTC would flood her office, hoping she might know of a way to offset the blow to their finances. She also kept close watch on the negotiations because she is one of the roughly 27 million Americans who receives the EITC.

“I actually had a sit-down with a tax preparer who told me what the changes would be, and then, because I'm in HR, I’m familiar with any tax changes that could affect my employer and our employees, so I was watching it from both sides,” Edwards says.

The American Taxpayer Relief Act of 2012, better known as the deal that helped the country avoid the fiscal cliff, extended current benefit levels for both the EITC and CTC for five years. The extension preserved improvements made to the EITC and CTC over the last decade, including marriage penalty relief and expansion of income thresholds, which allows low-wage workers to count more of their earnings toward the credits. The EITC, which has been shown to encourage work and improve children's school performance, is a powerful tool in helping to lift families out of poverty—it is our nation’s largest anti-poverty program, in fact.

Edwards says the affect the EITC has had on her family has been tremendous. She once utilized several federal safety net programs, but over the years she has increased her earnings, through a series of progressively better-paying jobs. She no longer qualifies for Temporary Assistance for Needy Families (TANF) or SNAP (formerly food stamps)—EITC is one of the last benefits she receives. If she continues on her current career trajectory, soon she’ll no longer qualify for EITC, either. But, as it is now, the tax credit provides her and her family with a very important hand-up.

“The EITC has been a huge help," Edwards says. "It’s practical and allows me to get money in one lump sum—money that I can use to catch up on bills, or make a major purchase, if I need to. I can get things like coats for the kids, if they’ve outgrown something. I have a larger family, so I’m not always able to replace all of the winter coats that no longer fit all at once. When I get my tax refund, which includes the EITC, that’s something I can do.”

This year, Edwards says she will likely use her EITC money to buy a used car, since the vehicle she uses for her commute to work, 60 miles round-trip each day, is old and she's nervous that it may soon break down beyond repair.  Edwards can see how, without the tax credit, she could easily fall back into the poverty that she has escaped. Without a working car, how would she get to work? Without a job, how would she pay her rent or feed her family? She thinks that those who diminish the importance of the credit, and think it should be reduced or eliminated altogether, just don't understand it's role in helping millions of families secure food, clothing, and shelter.

“The only people who could say something against [EITC] are those who aren't in a position to need it, or don't care about those of us who really do need it," Edwards says.