In December, I encouraged tribal leaders to move us down the road to self-sufficiency by providing opportunities and a nurturing environment for economically sovereign people. Promoting free tax preparation services and the Earned Income Tax Credit in Native communities is one good example of how we can do that.
The Internal Revenue Service has proclaimed Feb. 1 as National EITC Awareness Day. So First Nations Oweesta Corporation and the Native Financial Education Coalition are making special efforts to let working Native families know how the EITC can make a real difference in their lives.
At $40.9 billion, the EITC is the largest federal anti-poverty program in the nation, about the same amount as Temporary Aid to Needy Families and Food Stamps combined. It's a refundable tax credit for low- to moderate-income working families. That means that after you meet your federal tax obligation or even if you don't owe any taxes, you get the benefit back as a tax refund.
Despite the EITC program's success over a 30-year history, the IRS estimates that about 25 percent of eligible people don't claim the EITC. Last year, over $7.6 billion went unclaimed by families who could really use this additional income.
So how much money are we talking about for eligible families? This year, the maximum EITC refund for a working family (married, filing jointly) with two or more children is $4,536. Not all will get this much, but the average refund is still about $2,100. And, eligible people who did not claim the credit in earlier years may go back three years to claim missed credits. This refund could really help a Native family move closer to achieving their financial goals, whether that is to save for a down payment for a house, start a business or just get out of debt.
To determine whether you are eligible to receive the EITC, you can complete an electronic worksheet called EITC Assistant at www.irs.gov. Even relatives who are raising their grandchildren or nieces and nephews may be eligible. You can also download ''A Guide to Claiming the EITC'' at www.oweesta.org/eitc, which explains the benefit and how to qualify.
Now, how can the credit make a difference in our lives? One recent study estimated that 29 percent of American Indian children live in poverty. That is really depressing. One of the main goals of the EITC is to supplement income to raise families above the poverty line. Studies have shown that many recipients use the EITC refund to catch up on bills and pay everyday expenses. But more and more families are saving at least a part of their refunds for the future - saving for cars, education and things that can make them less dependent.
This year, for the first time ever, the Internal Revenue Service will offer refund-splitting, which will make it possible to have part of the refund deposited in a checking account and part in a savings account. So, the benefit of the EITC can reach beyond meeting immediate needs to working for a better tomorrow, a day when self-sufficiency will again be the norm among our people, and our children won't be the poorest of the poor.
But predators lurk. Native families need to be careful. Whenever a deal seems too good to be true, it usually is. When looking for someone to help you file your taxes and claim your EITC refund, be wary of predatory tax preparers who may skim off a large portion of your tax return through expensive fees and interest. Many families are lured by the prospect of getting their refunds as quickly as possible and use Refund Anticipation Loans, known as RALs. These are really high-interest loans and could mean trouble if there is a mistake on your return. A better alternative may be to have your refund deposited in your bank account; and you can expect to see it in less than two weeks. It is worth the extra few days for the money you will save.
Or better yet - look for free options to file your taxes in your community. The IRS supports Volunteer Income Tax Assistance sites across the country including in Native communities. Check with local government officials or visit www.irs.gov to find your nearest VITA site.
Many tribal and community leaders are working to bring the powerful economic tool of the EITC to their communities through aggressive outreach campaigns and free tax preparation services because they recognize that excessive fees can greatly diminish the refunds brought back into the community. Some efforts even include opening bank accounts, providing financial education or starting matched savings programs called Individual Development Account programs to supplement individuals' savings so that consumers are equipped to make the most of their EITC refunds.
The Ysleta del Sur Pueblo in Texas is starting its fifth year of providing free tax preparation services to tribal and community members. Since they started in 2003, they have increased the volume of tax returns in their community from $149,000 in 2003 to $613,000 in 2005. That is quite a capital infusion into their community. This year, the pueblo is exploring ways to expand its programs to encourage tribal members to develop savings plans through IDAs.
To learn more about bringing these services to your community, visit www.oweesta.org/eitc. You'll find helpful articles and links, outreach tools that can be personalized for your community and a booklet called ''A Tribal Leaders Guide to Launching a Native EITC Campaign'' with simple steps on how to get started.
So let's join the IRS campaign to bring the power of the EITC to our communities to take us one step closer to economic sovereignty and self-sufficiency.
Elsie Meeks, Lakota, is the executive director of First Nations Oweesta Corporation and the chair of the Native Financial Education Coalition. For more information, visit www.oweesta.org/eitc, www.ournativecircle.org or www.nfec.info.