Low-Income Residents Get Free Tax Aid; County Program Helps Maximize Their Returns

Low-Income Residents Get Free Tax Aid;
County Program Helps Maximize Their Returns

March 20, 2005 Sunday
The San Diego Union-Tribune
Jennifer Vigil

As tax preparer Lydia Goularte-Ruiz asked Laura Aguillon each question -- Did she itemize last year? Would she prefer to e-file? -- the Southcrest resident replied, "What's that?"

Goularte-Ruiz politely explained the concepts, then suggested it might have been best for Aguillon to withhold more from her paychecks over the past year, because the mother of two had worked multiple jobs.

"I'm really clueless about what this is," said the exasperated 24-year-old, as she tried to rein in her squirming 2-year-old son, Nino. "Oh, my God."

Aguillon was one of more than 30 people who used free tax-preparation services last week at the Bronze Triangle Community Development Corp., one of more than a dozen sites where a San Diego County program has preparers helping filers make sense of their 2004 taxes.

The financial help, performed in conjunction with the United Way and six private social service agencies, is offered to those with annual income of $35,000 or less, with one particular purpose in mind: to help funnel more money intended for the poor into the county.

The tax assistance is offered at several sites in San Diego, East County, North County and the South Bay.

Participation has risen each of the three years the service has been offered  at the Bronze Triangle center on Imperial Avenue in San Diego. Last year, 900 people had their taxes done at the center, and with less than a month to go before the April 15 filing deadline, more than 650 have come in this year.

"We have had every slot filled," said Goularte-Ruiz, who coordinates the center's tax program. "The only days we had no-shows is when it rained."

The federal government has offered the earned income tax credit, which benefits those with low incomes, for 30 years, but studies show that up to 25 percent of those who are eligible are not claiming the credit.

To qualify, childless singles must make less than $11,490 a year. Those with one child must earn less than $30,338 annually or $31,338 for married couples. The limit for those with more than one child is $34,458 a year, or $35,458 for married couples.

The benefits for a low-income household can be enormous. A childless worker can receive up to $390 in additional returns, but those with children can receive up to $4,300 if they claim the credit.

John Wancheck runs a campaign promoting the tax credit for the Center on Budget and Policy Priorities, a Washington, D.C., group that studies issues related to poverty and low incomes.

He called the tax credit "a powerful work incentive" that offers benefits to earners even as they begin to make more than $18,850, the federal poverty level  for a family of four. People are counted in the low-income category when they make double the poverty-level income.

"Unlike other lower-income benefit programs that sort of die out once you hit $20,000, the earned income tax credit keeps on kicking for you up into the $30,000 range," Wancheck said.

County officials decided they needed to help the poor take advantage of the tax break and spent $50,000 to launch the local program for the 2002 tax season. Pleased with the program's results, the Board of Supervisors approved $320,000 to broaden the tax aid three years ago.

In the first year, about 800 residents received $1 million in additional returns in the program, with more than $625,000 from the earned income tax credit. Last year, 5,700 filers sought aid from the county, 1,600 of who qualified for the tax credit, which brought in $2.4 million. Officials hope to double that total this year.

Nationwide in 2002, the latest tax year for which statistics are available, 22 million people claimed $37 billion in earned income tax credits. California captured a $4.3 billion share of that total for nearly 2.4 million workers. San Diego County's share, for 170,000 workers, totaled $287 million.

Wancheck said more agencies that provide advice on the credit are adding lessons in money management to the mix. San Diego Saves, a campaign associated with the national America Saves effort, is helping provide the service locally. The Consumer Foundation of America, a nonprofit agency of 300 education, advocacy and cooperative organizations dedicated to helping consumers, manages the America Saves program.

The San Diego County effort, led by Patti Wooten Swanson of the University of California Cooperative Extension, includes banks and other financial agencies that have agreed to waive service charges and maintain lower opening-balance requirements to encourage people to save.

"This may be the only time during the year they get a substantial check of money, which would be a very good time to begin a savings program," said Swanson, a family and consumer adviser.

The sites providing tax aid also are contacting filers who used their services to inform them of budgeting workshops. The Bronze Triangle center held its first workshop last month, attended by about a dozen people.

Goularte-Ruiz said it may be more challenging to persuade people to save than to receive free tax preparation. Feedback she has received at the center indicates that people need their returns to cover the basics or pay off debts.

That's how Mariela Guzman, 24, of Golden Hill said she would use her return, to cover payments and insurance on her car, which she hasn't been able to afford since her husband was jailed last year.

Isaiah Verdin, 23, a Pacific Beach landscaper, and Jose Avila, 35, an Alpine telecommunications installer, said their returns will help them save to buy a house.

Aguillon needs to repair the rain-damaged cottage she rents from her mother. An unpatched roof has chilled the house, she said, and the carpet and beds were left soaked. Her earnings, from a Santee extreme-sports company, and from taking photographs at the San Diego Zoo, won't cover the repairs.

Like the tax jargon that escaped her earlier, Aguillon does not recognize the  term "earned income tax credit," but once Goularte-Ruiz explains her return will be $1,000 more than last year's, the meaning doesn't matter. She smiles.

"I thought it was going to be about the same as last year," Aguillon said.  "It's a little bit more. It's good."

Tax benefits

For the 2002 tax year, San Diego County began a pilot program in North County and Central San Diego to help the poor take advantage of a federal tax credit.  First year: 832 people used the program, bringing in $1,032,834 in additional returns, with $626,623 from the credit. Second year: Program is expanded; 5,755 people used it, bringing in $4.7 million in returns, $2.4 million from the credit.