Taxes can be complicated, and it can be especially difficult to maximize your refund when completing your taxes on your own. For low- and middle-income households, these complexities are often a barrier to building financial stability.
There’s a program to help low- and middle-income households establish financial stability through tax assistance. Presented by United Way of Greater Richmond & Petersburg, Volunteer Income Tax Assistance (VITA) has been helping families in the area for nearly two decades by providing free tax preparation for individuals and families with incomes below $58,000.
Many people rely on professionals to prepare their taxes. However, tax preparation services can be expensive and present their own set of complicated questions: Which service should I use? Do I really need to pay that fee? Am I sure that I am receiving the highest possible refund?
Through VITA, a team of IRS-certified volunteers ensures that tax returns are accurate and that everyone receives their full refund. By using VITA, taxpayers will avoid fees for tax preparation services and many will discover unclaimed tax credits. This program also helps people avoid refund anticipation loans, which usually come with high interest rates, hidden fees, and payment plans that exacerbate existing financial challenges.
The program has a significant and positive impact on households with low and moderate incomes, which are often eligible for valuable tax credits, such as the earned income tax credit or the temporarily expanded child care tax credit. For a family with an income below $58,000, a tax refund can be a major opportunity to build savings and achieve financial stability.
Why Financial Stability is Impacted
When we talk about financial stability, we are talking about people’s ability to find and keep a decent job, provide for their family, and absorb common financial bumps in the road – such as a car repair bill or replacement costs for a major appliance. This is important because it means people can avoid debt and build savings for the future. Children from financially stable homes are more likely to enjoy healthy lives and succeed in school.
Unfortunately, too many people in our area struggle to achieve or maintain financial stability. The asset poverty rate – the percentage of people who do not have enough assets to survive above the poverty level for three months in the absence of income – is 24.5 percent in the eleven localities served by our local United Way. This means more than 100,000 households are living in a situation where an unexpected event such as a job loss, car repair, or health crisis could have a crippling effect on their immediate cash flow and long-term financial well-being.
Many people who are asset poor work hard but struggle to make ends meet: single parents, restaurant servers, retail workers, home health aides. Too many people in critical positions are living paycheck to paycheck and struggling to cover the costs of basic needs like housing, food, transportation, and healthcare. When funds run short, cash-strapped households are forced to make impossible choices, such as deciding between quality childcare or paying rent.
For many asset-poor households, a tax refund represents the greatest opportunity to gain a stronger financial foothold and avoid a financial crisis in the year ahead.
Accessing Tax Assistance
Partnering with local libraries, nonprofits, credit unions, and other places, United Way hosts more than a dozen tax prep assistance sites across Chesterfield, Charles City, Goochland, Henrico, Petersburg, and Richmond. All tax sites will follow social distancing guidelines and require masks. The in-person tax sites will operate by appointment only, and spaces may be limited. People can also access online tax preparation options from their homes.
Visit yourunitedway.org/tax or call (804) 771-5820 to find a tax site near you and make an appointment.
Become a Tax Assistance Volunteer
VITA relies on a network of volunteers to help as many people as possible. While the 2021 tax season is drawing to a close in the weeks ahead, it is not too early to start thinking about volunteering next year.
No specialized knowledge or prior experience is necessary to volunteer, and there are a variety of roles available to match your skills and interests. The programs need greeters, tax preparers, quality reviewers, interpreters, and more. Volunteers receive training in the fall and typically serve two to four hours per week when the tax season opens in January.
If you would like to become a volunteer, visit yourunitedway.org/tax to complete a volunteer interest form and start the process.