Both free and low-cost tax preparation programs sponsored bycredit unions are a great way to educate taxpayers about thecredits they can receive while educating them in regards to theirdecisions about the use of their refunds.

For their good deeds, credit unions might experience a directincrease in savings and checking account deposits, benefitenrollments, and an overall awareness of credit union services.This can further influence potential members in a credit union'sfield of service.

“Our free assistance program has proven to be an effectiveincome generating tool for low-to-moderate income wage earners,”said Elizabeth Carr, chief executive officerof Santa CruzCommunity Credit Union in Santa Cruz, CA. “The tax programis enhanced through our savings programs, which encouragesindividuals to save their refund.”

The Volunteer Income Tax Assistance program (VITA) offers freetax help and return preparation to people who generally make$53,000 or less, people with disabilities, the elderly and limitedEnglish-speaking taxpayers. SCCCU, with $104 million in assets, hasbeen offering this program for more than a decade.

According to NCUA, programs such as VITA improve the quality ofservices to members, make the operations of low-income creditunions more efficient and, ultimately stimulate economic activitiesin the communities served by the credit unions.

In cooperation with the Census Bureau, the IRS estimates thatnationally 79 percent (TY2010 data) of all eligible taxpayersreceive the EITC (a range of 78 percent to 80 percent)—implyingthat approximately 21percent do not claim the credit theydeserve.

According to the IRS, in 2014, 1 in 5 taxpayers (almost 28million filers) claimed the EITC, for an average credit of roughly$2,400.

The average fee for preparing a tax return, including anitemized Form 1040 with Schedule A and a state tax return willincrease a few dollars to $273 this year, a 4.6 percent increaseover the average fee of $261 last year, according to a survey bythe National Society of Accountants.

“When you consider that it takes the averagetaxpayer five hours to complete a tax return, this is a very strongvalue,” said NSA executive vice president John Ams in a statement.“The tax code continues to become more complex each year, includingsome new Affordable Care Act reporting requirements. Professionaltax preparers may also be able to find tax deductions and creditsthat may taxpayers might not notice.”

The survey also reported the average fees for preparingadditional Internal Revenue Service (IRS) tax forms, including $174for a Form 1040 Schedule C (business), $634 for a Form 1065(partnership), $817 for a Form 1120 (corporation), $778 for a Form1120S (S corporation), $457 for a Form 1041 (fiduciary), $688 for aForm 990 (tax exempt), $68 for a Form 940 (Federal unemployment),$115 for Schedule D (gains and losses), $126 for Schedule E(rental) and $158 for Schedule F (farm).

Not everyone can afford $261 for tax preparations, and in SantaCruz County, for many families VITA is invaluable, and can resultin receiving credit equal to an entire month's wages. A singlemother working full-time at $9.70/hr., raising one child wouldreceive $1,615 in Earned Income Tax Credits (the average EITCrefund for Santa Cruz County), and the equivalent of an 8 percentraise.

“The potential impact of this service is staggering,” Carr said.“Serving 500 “average” families would bring $807,500 into the handsof those who need it most.”

“Each year more than $6 million in tax credits remain unclaimedin our membership area. SCCCU is committed to helping our communityrecapture these dollars,” Carr continued. “Many low-income familiesdon't know the credits are available or don't know how to claimthem. Our free tax preparation clinics change that.”

The VITA Grant Program is an IRS initiative designed to promoteand support free tax preparation service for the underserved, inboth urban and non-urban locations. Service is targeted tolow-to-moderate income individuals, persons with disabilities, theelderly, and limited English speaking. IRS awards matching grantseach year to credit unions that offer free tax preparation servicesduring the tax filing season at locations in all 50 states and theDistrict of Columbia. Congress appropriates this funding to supportthe Volunteer Income Tax Assistance Program.

Travis Credit Union in Vacaville, CA with $2 billion inassets, participates in the VITA program from Februaryto April 15.

“From financial education to home ownership programs our goal isto put money back into the pockets of our working families andindividuals,” said Barry Nelson, president and CEO of Travis CreditUnion. “As a socially responsible corporate citizen, the VITAProgram is one of a number of ways Travis Credit Union can supportthe communities we serve.”

The National Credit Union Foundation's REAL Solutions programalso provides resources for becoming a VITA site.