Serving Those Who Served: How Claiming the EITC Can Support Veterans’ Financial Wellness
November 11, 2023Print
The transition to civilian life for many veterans is a complex journey that often includes health, employment, social, and financial changes. According to the U.S. Department of Housing and Urban Development (HUD)’s 2022 Point-in-Time (PIT) count, there are over 33,000 veterans experiencing homelessness, which is a 55.3% decline since 2010. In order to sustain this decrease and continue to further progress, HUD recommends that the government maintains investments to prevent homelessness among veterans, for example, the Earned Income Tax Credit (EITC).
The EITC offers a vital lifeline to eligible service members, enabling them to retain more of what they’ve earned and build a financial cushion to deal with unexpected emergencies. According to the Center on Budget and Policy Priorities, approximately two million veterans and military households receive the EITC, the refundable component of the Child Tax Credit (CTC), or both.
Raising awareness of these programs among veterans, both those recently discharged and those long-retired, can leverage the Earned Income Tax Credit (EITC) to bridge financial gaps, secure their families’ future, and gain the economic stability they rightfully deserve.
Understanding Veterans’ Financial Challenges
A study published in Military Medicine in July/August 2023 examined six indicators of perceived financial status among newly transitioned veterans over a three-year period. The study also explored perceived financial well-being, measured in terms of satisfaction and functioning, and assessed the difficulty of adjusting to civilian life as functions of financial status. The study found, upon separation from the military, about 1 in 8 veterans feel ill-equipped to manage their personal finances.
Moreover, research reveals a broad spectrum of financial situations for veterans immediately following their separation from the military. While some veterans experience stable housing, can cover essential expenses, and manage their financial obligations, others encounter challenges during their transition to civilian life. Financial stability post-separation includes having stable housing, having the ability to afford necessities, keeping up with creditors, having insurance for catastrophic events such as disability, saving for retirement, and setting aside three months of salary. Veterans who reported financial difficulties, particularly those facing higher stress levels and holding enlisted positions, were more prone to experiencing lower financial well-being (that is, unable to meet the goal posts listed above) in the post-separation period. Conversely, veterans who held college degrees at the time of separation and were employed reported higher levels of financial satisfaction.
The Unique Challenges Faced by Women Veterans
The 2023 Women Warriors Report provides a comprehensive view of the environment that women veterans, in particular, must navigate when they transition to civilian
When it comes to financial wellness, despite their higher pursuit of education, women warriors face a higher unemployment rate (10%) compared to male warriors (6%). About 65% of women veterans experienced difficulties making ends meet due to insufficient funds in the past year.
Empowering Veterans through the Earned Income Tax Credit
Highlighting the importance of the EITC, advocating for its enhancement, and spreading awareness about its benefits can make a significant difference in the lives of veterans.
Tax credits like the EITC are a vital resource for many who have served our country. After military service, veterans experience a median income of $37,466, as reported in the 2016 Veteran Economic Opportunity Report by the U.S. Department of Veterans Affairs. This income level can pose a significant obstacle to obtaining housing and buying a home post-service. Almost 2 million military households derive benefits from EITC and Child Tax Credit (CTC). These credits play a crucial role in supporting veterans in their pursuit of homeownership by enabling them to retain a greater portion of their income. Additionally, EITC funds are commonly used by families for essential household repairs, assistance with vehicle maintenance, and meeting basic needs. The aim is to help individuals transition from a military role to civilian life, allowing them to regain stability and independence.
The impact of the EITC on reducing poverty rates among veterans and their families is substantial. It’s essential to recognize that this tax credit not only offers immediate relief but also contributes to long-term financial stability. By ensuring veterans are aware of this valuable resource, significant strides can be made in reducing veteran poverty and improving their overall well-being.
Financial stability is within reach for the nation’s veterans, and by supporting initiatives that bridge their financial gaps, this nation can honor their service by helping them secure a brighter financial future for themselves and their families. Veterans deserve the peace of mind that comes from financial stability, and the EITC, if claimed, can play a pivotal role in achieving this goal.