This Tax Day, the EITC is Especially Important
July 15, 2020Print
By Devin Simpson
Tax Day 2020 is here, and like most things these days, it looks very different from years prior. The tax filing deadline was extended from April 15 to today to give taxpayers more time to file amid the COVID-19 crisis, and while tax season is always an important wealth-building opportunity for low-income Americans, it’s even more critical this year as many struggle to stay afloat.
Each year during tax season, roughly 25 million Americans claim the federal Earned Income Tax Credit (EITC), a refundable credit designed to offset taxes for low- and moderate-income workers. It is the largest anti-poverty program and among the most effective in our country’s tax code. In 2018, the credit lifted 5.6 million people out of poverty and reduced the severity of poverty for an additional 16.5 million people. What’s more, the credit is linked to improved health and education outcomes.
The value of the EITC cannot be understated in these unprecedented times when low-income Americans are bearing the brunt of the COVID-19 economic recession. According to the Urban Institute, 31 percent of working adults are struggling to meet basic needs and 41 percent have reported loss in employment or income due to the pandemic. With so many in dire financial situations, loss of housing and a lack of access to medical care are on the rise. These issues have hit communities of color, particularly Black communities, the hardest as they already face systemic barriers to income, wealth, and health.
The EITC is a critical resource for low-income families, particularly during this time. Researchers and tax policy experts have highlighted the EITC a key element of COVID-19 policy responses at the federal and state level. Policymakers can help protect the financial security of low-income Americans by expanding the EITC, increasing the credit’s value for workers without dependent children, and expanding access to the credit for taxpayers with Individual Taxpayer Identification Numbers (ITINs). These improvements to the credit would go a long way in helping households maintain financial stability during the pandemic and beyond.