Going Over the Fiscal Cliff

• Mission: The Omaha EITC Coalition promotes the claiming of tax credits through quality volunteer tax return preparation with a goal of providing educational tools and community resources for family asset development.

• Vision: The Coalition promotes financial stability through empowered customers who use tax credits and tax refunds to own and maintain assets.

• Values: Inclusiveness, Non-partisanship, Customer Empowerment, and Quality Service

Omaha EITC CoalitionBuilding Assets One Taxpayer at a Time!

Customer Understanding

• Report on 2011 Tax Year• Be Amazing: An African-American Economic Journey• Increasing the Latino Stake in Omaha’s Economy • At the Crossroads of Risk & Opportunity for Persons

with Disabilities• Change our Constant Companion

• Context of Change• Poverty Dialogue Series to spur discussion• Goal: Customer Input and Action

VITA Means to Me

Why “Poverty Dialogues?”• The Omaha EITC Coalition’s priority is customer empowerment• The preparation of tax returns provides a complete look into a

person’s income, family composition, expenses, opportunities and challenges

• The opportunity to influence financial decisions presents itself as our certified volunteers dialogue with a customer about their financial life– Our approach to financial education is intense, personal, honest, and direct

• We want our customers to come to know themselves and to see and take advantage of opportunities that arise through the involvement of our Coalition partners in improving their financial stability– We welcome new partners to the Coalition to help low income

communities progress in economic success

Building Wealth• Coalition’s approach to poverty reduction :

• Increasing access to financial services • Increasing wealth by building savings • Using tax credits (especially EITC, CTC, DC), Savings, CDs, bank accounts,

education investment, credit repair leading to more access to mainstream financial services, better interest rates, more access to credit, stronger relationships with banks

• Promoting programs that help families and children because of the cyclical effect of poverty and the damaging impacts of childhood poverty

• The Omaha EITC Coalition understands asset development to be a universal process whereby people of all income levels aspire to accumulate, maintain and preserve economic resources to build lasting wealth and participate fully in the community as empowered and educated owners with increased financial knowledge and capability, access to credit, savings and investments

Economic Context

• Severe recent recession has produced a changing climate in part focused on new accountabilities and a new structure of investment, public and private

• The old service-based economy is being replaced by an emerging economic model in part characterized by:– Long-term unemployment– Knowledge-based jobs with greater expectations and more stringent

qualifications

• Nebraska’s strengths– Agriculture basis– Diversified urban and semi-rural businesses– Still, not immune to national trends

On a Clear Night, you can see forever….

…except for the Icebergs in your path.

Asset Poverty

• 23% of Americans (18% of Nebraskans) live in asset poverty

• 14% of Americans (12% of Nebraskans) live in extreme asset poverty = ZERO assets

Accessed from: http://scorecard.cfed.org/state_data/nebraska.php

Community Strengths• Between 2003-2010, the percentage of African-American high

school graduates attending college rose from 53% to 69% (Empowerment Network, 2012)

• An amazing 82% growth rate in the first decade of this century in Omaha for Latino Community

• Nearly half of Latinos filed Married Filing Jointly• Other important recent gains in the community:

– A recent fall in gun violence– The launching of community orientated organizations (Communities

in Schools, Impact One, and the North Omaha Neighborhood Alliance)

– The opening of new businesses– New housing units

Overall Tax Results from 2011• Average Adjusted Gross Income (AGI) was $20,111• The total amount in federal tax refunds was

$6,862,194 (average tax refund of $1,857)• State Refunds were $1,200,814 (average state

refund was $255)• The percentage of the total refund amount derived

from income tax credits was 48• For many customers, income tax credits supplement

annual earned income and lift an individual or family from poverty.

2011 Tax ResultsIowa 5

38,322 women (13

percent) in the district live in poverty

3,044 African-Americans (48 percent) in the district live in poverty

11,981 Latinos (32 percent) in the district live in poverty

Nebraska 2

45,434 women (14 percent) in the district live in poverty

20,728 African-Americans (34 percent) in the district live in poverty

20,478 Latinos (30 percent) in the district live in poverty

1,538 Asian-Americans (11 percent) in the district live in poverty

Nebraska 1

42,460 women (13 percent) in the district live in poverty

6,108 African-Americans (49 percent) in the district live in poverty

11,124 Latinos (26 percent) in the district live in poverty

1,527 Asian-Americans (13 percent) in the district live in poverty

3,351 American Indian and Alaska Natives (47 percent) in the district live in poverty

Banked Vs Unbanked

2008 2009 2010 20110

500

1000

1500

2000

2500

Banked un-Banked

2011 Tax results

Paid Bills

Paid down a

debt

Save

d it

Bought a

car o

r a m

ajor a

ppliance

Recreti

onal use

or vaca

tions

Spen

t come,

saved

some,

and/o

r inve

sted so

me

I did not g

et a r

efund

I owed

IRS

N/A0

10

20

30

40

50

60

70

80

20102011

2011 Tax Results

Sch ASch B

Sch CSch C-EZ

Sch DSch E

Sch FSplit Refund

0

50

100

150

200

250

Asset Schedule TY 2011

201120102009

Num

ber o

f Sch

edul

es

Financial Behaviors

Savings Retirement Saved w/Someone else

Money Order CheckCasher Wired Money Payday None0

100

200

300

400

500

600

700

800

TY 2011 Financial Behaviors

Savings Habits

No Monthly Savings

66%

1-3%24%

3-5%5% 5% +

5%

TY 2011 Savings Habits

Go from This to That

Health Care Coverage

EMPLOYER35%

Self-Em-

ployed1%Individual

3%

COBRA1%

LTC1%

Medicare7%

Medicaid9%

No Insurance44%

TY 2011 Type of Health Coverage

New Challenges

• A paramount concern for the Coalition’s customers is the overwhelming large proportion of total income tax credits to total income tax refunds.– Most tax credits will be significantly reduced or expire

on 12/31/12; this is the “fiscal cliff” we hear about in the news

• Progress in formal education and job training skills are at risk due to the loss of the Education Credits

• The loss of the Mortgage Forgiveness Act of 2007 is also a dramatic blow to the low to middle income

Inside Look

• “The Computer can’t tell you the emotional story. It can give you the exact mathematical design, but what’s missing is the eyebrows.” Frank Zappa

The “Fiscal Cliff”

• Expiring Issues:– “Bush Tax Cuts”– EIC– CTC– Education Credits– Social Security Holiday– General Sales Tax Deduction, AMT Patch, Educator Expenses,

Tuition and Fees Deduction– Mortgage Forgiveness Act

• Mandatory Cuts (Sequestration)• Real Impact of the Affordable Care Act

A Typical Family

• MFJ, 2 small children, $46,800 earned income, job loss & unemployment, lost home to foreclosure.

• In 2012:• Refund $3,870

• In 2013 (given no changes):• Amount Due: $11,895

Feedback for Thought

• Anticipate what will happen in the future• Don’t get too comfortable with your “goodies”• Prepare for higher taxes • Educate your family and kids to save and

prepare for the worst• Empower clients to raise their voices• Educate customers to deal with: finances,

economic hardships, and poverty

Outreach

• Conversations about the tax code, role of credits, reweaving a safety net for the neediest

• Partnering with Community Leaders and Organizations

• Writing letters and Visiting Elected Officials• Notifying Customers of Tax Law Changes

VITA =

BE THE CHANGE

At Your Service

Ed LeahyDirector, Omaha EITC Coalition

3605 Q StOmaha, NE 68107

402-250-9781omahaeitc@cox.net

Facebook.com/OmahaEITC