A call for dedicated tax support centers for transition age youth around the country
Filing taxes could mean hundreds or thousands of dollars in tax refunds for transition age youth, including those who have been in foster care or homeless. In California, the federal and state Earned Income Tax Credit programs are the largest income transfer programs, lifting millions of people out of deep poverty.
Yet no one knows how many current and former foster youth are filing their taxes or have received financial funds intended to reach them. Unfortunately, tax filing information and appointments are often out of reach for transition age youth due to a lack of awareness and hands-on assistance.
There is a straightforward solution to this problem. We should establish Volunteer Income Tax Assistance (VITA) sites dedicated to transition age youth, and then work relentlessly to promote them with public education campaigns aimed at youth, caregivers and workers.
We have seen already the difference that a VITA site can make for these young people starting their adult lives. Volunteer tax preparers have already made a huge difference for hundreds of California foster youth who received their support in filing, on average boosting transition age foster youth filer income by 15%, and parenting youth’s income by 31%.
During the pandemic, tax filing has proven to be critical as it was the means to distribute over $12 billion in emergency relief and stimulus payments. In a 2021 pilot with Santa Clara County, 45 youth collectively received over $135,000 in tax refunds. In 2022, six counties helped 208 youth receive over $628,538 in tax refunds, an average of $2,789 per youth. Counties and partner organizations completed training and testing to become IRS certified tax preparers and launched local VITA sites dedicated to supporting first-time filers transitioning from foster care.
While some of the tax credits bringing about these critical income boosts were temporary, there is now a permanent reason in at least one state for current and former foster youth to file their taxes each year. In its recently adopted state budget, California established the first in the nation Foster Youth Tax Credit, a $1,000 refundable tax credit for current and former foster youth ages 18 through 25.
When fully implemented, the $21 million dollar program has the potential to provide direct financial assistance to an estimated 20,000 current and former foster youth annually when they file their state tax return. I fully expect that similar tax-time supports will be considered for transition age youth in other states.
To ensure every youth who qualifies for the tax credit receives it, John Burton Advocates for Youth is launching the California Foster Youth Tax Filing Challenge and partnering with county social services to offer VITA appointments for current and former foster youth. I fully expect that similar tax-time supports will be considered for transition age youth in other states.
In addition to maximizing benefits, it is critical that we help current and former foster youth identify and address the kinds of serious problems that arise when taxes are not paid, or when people in their lives fraudulently create problems for them.
Dedicated VITA sites have been able to help youth who owe taxes correct their tax withholdings, establish tax payment plans and pay off tax debt with financial support. As a result, young adults better understand how to set aside a portion of unemployment or self-employed earnings for tax time and ensure enough money is set aside in their paychecks. Sites have helped connect youth experiencing fraud to Low Income Tax Clinics to support youth with identity theft protection pins and settling IRS-related problems. Resolving issues of fraud early on protects young people from future years of harm.
There are lots of important discussions happening about how to financially buffer transition age foster youth as they prepare to become adults. Many of these proposed supports involve tax filing, and others will count as taxable income.
We must ensure that youth understand and are unafraid of the tax system. And America’s VITA system presents the opportunity to do just that.
The Imprint’s colleagues at Fostering Families Today has produced “Dollars and Sense,” a guide to helping transition age foster youth file taxes, protect their identity and manage their finances. Click Here to pre-order a copy.
