THE GREAT DRAIN GAME: The Earned Income Tax Credit, Refund Anticipation Loans, and how lower-income Coloradans get hurt by rapid refunds at tax time
For millions of Americans and more than 250,000 Coloradans, tax season brings a much needed boost through an earned income tax credit (EITC) refund. The EITC is one of the few income tax breaks available to people who work, but earn low wages. In 2006, the federal earned income tax credit could be as high as $4,536 for a single parent with two kids earning less than $14,000 per year. The average refund is about $1,200. Most families desperately need these refunds to catch up on household bills, pay down debt or repair the things that have broken over the past year. Unfortunately, that desperation often drives families to fall prey to the temptation of a “rapid refund” from paid tax preparers like H&R Block or Jackson Hewitt.
Released May 2007