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Strengthening the Earned Income Tax Credit: Alternatives to refund expectation loans

Strengthening the Earned Income Tax Credit: Alternatives to refund expectation loans

Sandy Gerber Community Developing Senior Venture Manager

Since its inception in 1975, the Earned Income Tax Credit (EITC) happens to be lauded among the many crucial income-enhancement programs for low-wage workers. This system provides refundable income tax credits to those who are working but whose profits fall below a level that is certain. For income tax 2008, the eligibility threshold for a married couple filing jointly, with two or more children, was more than $41,000 year. The amount of the credit was as much as $4,824, based on an employee’s earnings, marital status, and quantity of qualifying kids. In 2007, very nearly 24 million families that are working people received EITC refunds, which provided near to $48 billion in extra earnings. 1/

The EITC provides a primary, quantifiable, and frequently substantial upsurge in the earnings of low-wage-earning households. Nevertheless, through the decade that is past the effect regarding the EITC happens to be afflicted with the development for the refund expectation loan, or RAL. RALs are short-term loans supported by the EITC as well as other refunds which are forthcoming from the Internal Revenue Service (IRS). Continue reading