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SaveFirst

A Tax Preparation and Financial Literacy Initiative

 

 

The goal of the SaveFirst Initiative is to train college, graduate, and law students to provide free tax preparation and opportunities for savings and investment to low-income individuals, especially targeting those eligible for the Earned Income Tax Credit.

 

 

Background

 

Abusive practices such as payday loan schemes, check-cashing operations, and predatory lending target low-income individuals and dramatically erode their earnings. The Earned Income Tax Credit is the federal government's largest and most successful antipoverty program for low-income working families. However, 75% of Alabama's EITC recipients pay an average of $200 to commercial tax preparers just to access this benefit. They also often take out predatory refund anticipation loans (RALs) on their expected refunds at annual percentage rates of up to 800%, further eroding the benefits of the EITC. In Alabama, more than 492,000 families claimed an estimated $1 billion through the federal EITC in 2005. However, these families lost $78 million to commercial tax preparers through fees and RALs.

 

two students helping

Program Components

 

1. Free Tax Preparation.  Students attend a 6 hour training session in early January during which they learn tax law concepts such as determining filing status and dependency expemptions, how to report sources of income, and figuring the eligibility of tax credits. Students also become proficient in using a web-based tax software tool during the training. Following the training, all students must pass an IRS certification test. Once certified, students prepare taxes at community-based sites across the state from mid-January to mid-February.

 

 

Tax Training ProgramLocations of Tax Prep Sites (including maps)

 

 

2. SaveFirst: Poverty in America Course (UH 331 / MGT 491) Students enrolled in this poverty service-learning course discuss and reflect on issues such as perceptions and misperceptions of those living in poverty and current politics affecting working families. Through their direct service at SaveFirst sites located directly in communities of need, students then gain firsthand experience and the ability to think more critically about those issues introduced in the classroom.

 

3. Legislative Reform Agenda SaveFirst goes to Montgomery in 2009! A new major effort that we are launching during our third year is to organize all students participating in SaveFirst to work together to encourage the Alabama State Legislature to pass the Alabama Individual Tax Preparers Act and reform the commercial tax preparation industry. Basing our own model legislation upon statutes that several states from around the country have enacted, our legistlation will provide oversight over the industry and support nonprofit free tax preparation efforts statewide. Utilizing hundreds of college students not only brings more attention to this important effort, it also inspires the students themselves to believe in the efficacy of collective action and to continue to work for structural changes to solve societal problems.

 

 

Legislative AgendaJoin the SaveFirst Legislative Team!

 

 

4. Asset Building Opportunities. Assets create opportunities that mere income cannot by fostering long-term thinking and behavior in both economic and social aspects of life. Eligible clients are given materials on and encouraged to consider investing in Individual Development Accounts. IDAs are matched savings accounts that allow eligible individuals to contribute up to $2,000 to be matched by local and federal funds $2 to $1 toward the purchase of a home, higher education, or development of a small business. SaveFirst has established partnerships with organizations statewide that offer matching funding for IDAs, and participating students can proivide informaton to our clients to encourage them to make use of these innovative saving opportunities.

 

 

Collaboration

         

The University of Alabama is a leading campus for SaveFirst.  Students from UA combine their service with students from other campuses across the state to maximize the impact of their service and the various universities' tremendous resources.

 

SaveFirst is a collaborative effort among Impact Alabama, fourteen Alabama universities and colleges, seven cities, the Internal Revenue Service, and more than fifty businesses, churches, and community organizations throughout the state of Alabama. We are grateful to all of our community partners for the success of this effort.

 

Achievements To Date

 

More than 75 UA undergraduate and law students worked at free tax preparation sites across the state to prepare over 1,000 returns for working families - helping them to secure $1.2 million in tax refunds and saving them $200,000 in commercial tax preparation fees.

 

UA students provided a critical role in a statewide initiative sponsored by the Center for Ethics & Social Responsibility and Impact Alabama. UA students collaborated with 185 additional students from eleven other campuses across the state to assist low-income working families.

 

 

How You Can Be Involved

 

UA students participate in SaveFirst in two ways:

 

1. Service-Learning Course.  The Center for Ethics & Social Responsibility sponsors a service-learning course that allows students to combine academic coursework with service through SaveFirst.  Through readings and classroom discussion, students examine issues of poverty including perceptions and misperceptions of individuals living in poverty, race and poverty, federal policies toward the working poor, and predatory lending practices.  Complementing the academic component is a service requirement to provide free tax preparation services and financial literacy information to individuals in low-income Tuscaloosa neighborhoods. Through their direct service at SaveFirst sites located directly in communities of need, students gain firsthand experience and the ability to think more critically about those issues introduced in the classroom.

 

     Course credit for the SaveFirst service learning course is available in the spring semester through UH 400 and MGT 491.

 

2. Volunteer with SaveFirst.  Students are also trained and volunteer outside the context of the course, typically committing four hours per week from mid-January to mid-February.

 

 

For more information and/or to sign up, please contact Sarah Louise Smith, SaveFirst Coordinator at 348-6494.