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Tax Relief for Working Family Harvey and Irma Victims

September 14, 2017

Washington, DC – Today, U.S. Congressman Lloyd Doggett (D-TX), Ranking Member of the Ways & Means Tax Policy Subcommittee, was joined by more than 30 colleagues in introducing legislation to provide tax relief to working families impacted by Hurricanes Harvey and Irma. Rep. Doggett said:

“Tax relief for working families is an important component of Hurricane Harvey and Hurricane Irma relief efforts. This bill represents a modest measure to help those who have already suffered a natural disaster from also incurring an economic disaster.

“Each year the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) help lift millions of the working poor out of poverty. In many communities, the Volunteer Income Tax Assistance (VITA) program begins assisting workers in January in filing for this refundable tax credit. Just as volunteers have been so vital recently in rescuing and assisting victims, future VITA volunteers will be essential in providing assistance in securing the benefits of this legislation.

“The hurricanes have interrupted jobs and wages for many, particularly in service industries. Reduced earnings this year caused by the disaster would otherwise lower assistance to hard-working families when it is needed the most. We cannot allow devastation to extend further into the pocketbooks of already struggling communities.”

This bill would ensure qualifying individuals and families in Hurricane Harvey and Hurricane Irma federal disaster areas receive the maximum assistance from the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) by giving them the option of using their prior year, pre-hurricane income to compute the credits.  In the wake of Hurricanes Katrina, Wilma, and Rita, similar tax relief was provided, but it was not offered after Superstorm Sandy.

An example of how an average family would be affected by this bill is described in the hypothetical situation below:

Mary is a single mother to 2 kids and works as a cashier at a local restaurant. She earns $15,000 a year and received $5,572 from the Earned Income Tax Credit and $1,800 from the Child Tax Credit in 2016. Following Hurricane Harvey or Irma, Mary’s restaurant was destroyed and she was unemployed for the rest of 2017. Mary’s 2017 income was reduced to $10,000 a year and she would qualify for $4,010 from the Earned Income Tax Credit and $1,050 from the Child Tax Credit. Mary’s total tax credit benefit was reduced by $2,312 in 2017. Under this bill, Mary could use her 2016 income to maximize her tax credit benefit and receive the amount she anticipated before the hurricane.