UA, Impact Alabama Offer Free Tax Prep Services for Working Families

TUSCALOOSA, Ala. – More than 140 students from The University of Alabama Center for Ethics & Social responsibility and Impact Alabama are providing free tax preparation services to working families across the state.

In Tuscaloosa, the free tax clinic will be offered through Feb. 27, Monday-Thursday from noon-8 p.m., Friday from noon-6 p.m., and Saturday from 9 a.m-3 p.m. in the Tuscaloosa Housing Authority’s Rosedale Court, 2808 10th Ave. Those interested should call 1-888-99-TAX-AL to schedule an appointment.

UA students working under the supervision of SaveFirst, a nonprofit tax preparation and financial literacy initiative of Impact Alabama, will provide free income tax preparation services to working families making less than $49,000 a year with children in the home or $20,000 a year without children in the home.

The service is designed to assist families who are eligible for the Earned Income Tax Credit – a federal program for low-income, working families.

Each year, about 78 percent of Tuscaloosa’s EITC recipients pay an average of $250 to access this benefit, tax clinic organizers say, often by taking out predatory refund application loans (“rapid refunds”) on their expected refund with annual interest rates of up to 800 percent. Some 8,900 families in Tuscaloosa claimed an estimated $20.3 million through the federal EITC in 2006. However, tax clinic organizers say the families lost millions to commercial tax preparers through fees and refund loan costs.

Alabama ranks 49th in the nation for the percentage of families paying commercial preparers and taking out refund application loans. More than 492,000 families in Alabama claim some $1 billion through the federal EITC each year, losing $77 million to tax preparation and refund anticipation loan costs, clinic organizers note. The average total refund for Alabama taxpayers claiming the EITC who also received other federal tax credits is $3,200, they add.

Impact Alabama’s SaveFirst initiative is in its fourth year of operation. Last year, some 400 trained students from more than 10 college campuses prepared tax returns for 2,600 families in 12 cities statewide, including Birmingham, Montgomery, Mobile, Huntsville, Tuscaloosa, Bessemer, Gadsden, Tuskegee, Dothan, Decatur, Auburn and Marion. In six weeks, the statewide campus collaboration helped working families secure more than $4.7 million in tax refunds, saving them more than $670,000 in commercial tax preparation fees.