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Money Smart Press Releases
FDIC and IRS Partner in Promoting Bank Access and Financial Education to Workers Eligible for Earned Income Tax Credits
The Federal Deposit Insurance Corporation (FDIC) and the Internal Revenue Service (IRS) announced today they are strengthening their efforts to promote bank relationships and financial education among consumers eligible for the Earned Income Tax Credit (EITC) Program through IRS Voluntary Income Tax Assistance (VITA) sites around the country.
The EITC is a special tax benefit for working people with low or moderate incomes (under $35,500 per year). VITA sites offer free tax help to eligible wage earners and help consumers obtain the tax credits to which they are entitled.
Within the next few weeks, all 48 VITA site territory managers and the 265 coalitions working with them will receive notification about the assistance available through the FDIC’s Regional Community Affairs Program to identify financial institutions that may be interested in working with VITA sites. The notification will include FDIC points of contact as well as information to share with tax filers on the FDIC’s self-paced computer-based instruction Money Smart program, which is available in English and Spanish to consumers at no cost. The FDIC will also be notifying its financial institutions about opportunities to work with VITA site clientele to establish bank accounts.
Workers who qualify for the EITC and file a federal tax return can get back some or all of the federal income tax that was taken out of their pay during the year. They may also get extra cash back from the IRS. Initial estimates for 2004 show approximately 22 million low-income families received about $38 billion, which in turn flowed into their local communities. IRS studies indicate millions more are eligible but fail to claim the credit. The maximum credit is $4,300 for a family with two or more children.
During 2004, the FDIC – through its Community Affairs Program in its eight regional and area offices around the country – worked with partners of its Money Smart “Model Sites” (sites where the FDIC’s Money Smart financial education program is taught on a regular basis, with active participation by financial institutions and links to other asset-building or service programs) and a number of community-based organizations and coalitions to promote the establishment of VITA sites and increase awareness among low-income consumers about eligibility for tax credits. Through hosting VITA sites, FDIC Money Smart Model Site partners have helped over 3,435 families file EITC claims totaling more than $5.1 million, with an average return of about $1,485 per family.
“Use of EITC refunds to establish or build savings in low-cost or no-cost bank accounts represents an excellent opportunity and important step to begin building financial security for many families in low-income communities,” said FDIC Chairman Don Powell. “Low-income workers may have difficulty saving part of their wages for long-range goals. EITC can make that more feasible for them.”
"We are pleased to be working with the FDIC on this important area," said IRS Commissioner Mark W. Everson. "We want all people eligible to claim the EITC benefit to get it. People who want to get the full benefit of EITC should look into getting banking services, which allows direct deposit of refunds and avoids expensive convenience charges from check cashing or refund loans."
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For more information about VITA and EITC, visit the IRS Web site at www.irs.gov.
To learn more about the FDIC’s Money Smart program, visit the Money Smart page on the FDIC's Web site at http://www.fdic.gov/consumers/consumer/moneysmart/index.html. In the three years since Money Smart was released, more than 294,400 adults have completed a Money Smart course and more than 39,180 new banking relationships have been established by Money Smart students. Money Smart was awarded a Service to America medal by the Partnership for Public Service.
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