Earned Income Tax Credit helps families toward stability

Published on April 1, 2019 in

We're helping families keep more of what they earn as they strive toward life goals.

Note: This post describes pre-COVID services. For current information on virtual tax preparation services, visit our Tax Assistance webpage.

If every home has a story to tell, Renee Perkins’ brick colonial on the west side of Detroit spins a tale of overcoming the odds and achieving impossible goals.

In the home, dark hardwood floors lead to a fireplace topped with pictures of her son, 6, and her daughter, 1, along with the brightly-colored drawings they’ve made at school. Nestled between the photos is an award from Wayne Metropolitan Community Action Agency, which recognizes outstanding clients who have overcome significant barriers to achieve success.

And that’s precisely what Renee has done. With the help of various programs offered through our partners at Wayne Metro, the 29-year old, who works as a table games dealer at MGM Grand Detroit, became the first person in her immediate family to own a home.

As part of our work to help households become stable, United Way partners with organizations like Wayne Metro to provide free in-person tax preparation services. We also offer free tax preparation services through United Way Worldwide’s MyFreeTaxes.com. These services help people keep more of what they earn and pave the way to financial stability.

Powered by the EITC

One of the benefits of using these services is the knowledge employed by tax professionals. For example, many people who qualify for the Earned Income Tax Credit (EITC) are not aware of it. Filing for this credit can add thousands of dollars to a family’s budget.

“It was a blessing to learn about EITC,” Renee said. “With that money, I was able to pay down debt and help my credit. That helped me get to where I am today.”

In 2018, collaborative efforts between United Way for Southeastern Michigan, Detroit Mayor Mike Duggan and free tax prep providers helped nearly 85,000 Detroiters claim the EITC. As a result, they recouped nearly $300 million in federal and state EITC tax refunds that had historically gone unclaimed. That’s an average of $3,500 per family.

For many, the EITC is the single largest lump sum of money they will see in a year. How it’s handled can have a long-term impact on financial stability.

“When people come to our tax sites, we have financial coaches available to help make the most of their refund,” said Arnitra Cooksey, tax services manager at Wayne Metro. “There are a lot of options available, whether they want to use some of the money to supplement basic needs, pay off debt or set bigger financial goals.”

With additional donor support, we can reach more people next tax season. Tax credits like the EITC can make a huge difference for the families in our region who struggle to keep up with their bills and afford their basic needs.

Recognizing the power of the EITC as a springboard for positive change, Renee worked with Wayne Metro in 2016 as a tax preparer to help other families receive the credit.

Renee Perkins sits on a couch inside her new home.

Making the impossible possible

Renee first came to Wayne Metro in 2013 for assistance with a DTE bill that had grown unmanageable. Buried under the weight of a looming shutoff, she was desperate for help.  She created a payment plan and was connected with a financial coach.

“It was scary and intimidating at first because I had a lot of debt,” Renee said. “I had a $3,500 eviction and money I owed cable companies. I didn’t know how I’d pay that off, but they helped me create a plan.”

Anne Sergent, one of the financial coaches Renee worked with, said “That’s what’s so inspiring. The clients trust us and work with us and then they’re empowered to reach their personal goals.”

For Renee, the goal was homeownership. With help from her coaches and the EITC, she was able to pay down debt, establish a budget for the first time, enlist in the homebuyer’s education program and save for a home.

It wasn’t an easy road and there were setbacks along the way, but the diligence of her coaches coupled with the impending birth of her daughter motivated her to succeed.

Even after saving and receiving her tax refund, she was still unable to make the down payment. A $1,500 microgrant from the United Way provided the last bit of funding needed to help her achieve her dream of homeownership.

“The microgrants are so key,” said Karen MacDonald, director of Economic Opportunity Services at Wayne Metro. “It may take a client six months to save an extra $1,500. By then the home is no longer available or the price has risen. They’d never be able to catch up with the housing market without it.”

Planning for the future

Looking around her home, Renee’s pride fills the room. The home means safety and stability for her children and a life much different than what she experienced growing up.

“I’ve always been the one to take care of others,” she said. “My family comes to me for help. That’s a lot of weight. This is something I did for myself and that feels good.”

Renee’s tenacity hasn’t gone unnoticed by the team at Wayne Metro.

“She has strong survival skills and a very impressive character,” Anne said.

Renee understands that her story can serve as an inspiration and that’s why she tells others to keep going.

“Keep trying to reach your goals even when it seems impossible,” she said.

A self-described caregiver, Renee said she plans to save this year’s tax credit and one day open an adult foster care home.

“God has picked me up and carried me this far. And now I know I can go even farther and help others.”