At Tax Clinic, Some Relief From Those Low-Income Blues
At a recent tax assistance clinic for low-income people, Diane Lawrence mulled over a tabulation of her earnings from last year. Working a temporary job as a cook and another job handing out free newspapers, she'd taken in $2,158. And that was before $63.10 had been taken out in federal income tax, $57 in D.C. income tax, $31.29 in Medicare tax and $133.82 in Social Security tax.
How does one live on so little money?
"You don't," said Lawrence, 52, who lives in government-subsidized housing, the Shalom House apartments in Northeast Washington, where the clinic was held Saturday. "I'm just struggling to survive."
The W-2 form that Lawrence brought to the clinic was not just a financial statement. The document told a story of frustration and despair, of belt-tightening and dollar-stretching to the breaking point.
"Despite amazing economic progress in D.C., our lowest-income families are not moving ahead," said Ed Lazere, executive director of the D.C. Fiscal Policy Institute. A recent study by the institute showed that the annual incomes of the District's richest families rose by 81 percent, to an average of $157,700, during the past two decades, while the incomes of those at the bottom went up only 3 percent, to an average of $12,700.
Even when a person earned a high-end low-income salary of, say, $35,000, as Brenda Dobbs did working as a secretary last year, the bottom line was the same: a struggle to make ends meet.
"It looks good on paper," Dobbs said of her earnings. "But after all of the taxes come out, I'm sometimes faced with a choice of paying the rent or eating, or providing for my 13-year-old son, with me having to go without."
The tax clinic was offered by volunteers from So Others Might Eat, a District-based community services organization, and was made possible by a grant from the Children's Defense Fund. Clinics for low-income residents will be held each Saturday until April 15 at locations throughout the area. For more information about the Children's Defense Fund tax assistance program, call the fund at 202-628-8787.
Dobbs was relieved to learn that she was eligible for the earned income tax credit, which sometimes entitles low-income filers to a cash payment on top of a refund. And the free tax preparation had saved her about $150 -- maybe even more. Some tax preparation services entice customers with offers of tax refunds on the spot, which can be very appealing to those strapped for cash. If they read the fine print, however, they'd see that the instant "refund" is actually a cleverly disguised high-interest loan.
Dobbs resisted the temptation and opted for the free service. She ought to get a refund check in a week to 10 days.
"I think I fared fairly well," she said. "Just enough to get a little treat." Asked what that might be, she replied: "Get my car tuned up and take my son out for a weekend drive."
As if working hard and having little to show for it were not bad enough, low-income workers have another worry: special attention from the Internal Revenue Service. In a report released in January, the Taxpayer Advocate Service said the IRS froze the refunds of more than 120,000 taxpayers last year on suspicion of fraud -- without notifying the taxpayers or giving them a chance to respond. Many of the returns were filed by low-income workers, including some who claimed the earned income tax credit.
