“Taxes Plus: Go Further with MEDA” to Bank on your Family’s Future

Taxes Plus-BlogIn the 2014 tax season, MEDA staff, 120 volunteers and the lead sponsorship of Bank of the West and Citi helped almost 3,500 families get over $5.3 million in refunds, all at zero cost to clients. While those numbers are impressive on their own, it’s actually just the start.

MEDA has a Mission neighborhood SparkPoint center, Plaza Adelante, for a reason: it’s the needed venue to implement an innovative service-integration model.

What does this mean for those coming to MEDA—and the nonprofit’s three other VITA sites—to get their taxes done for free? It means that MEDA does not see doing someone’s taxes as a one-time, transactional event, especially for the over 80 percent of return clients; rather, it’s a way to foster asset building for low-income Latinos via a program called “Taxes Plus: Go Further with MEDA.”

Mattias Kraemer, Deputy Director of Asset Building, explains the model as follows: “‘Taxes Plus: Go Further with MEDA’ harnesses the extraordinary energy and savings potentials of tax time, channeling these into safe opportunities for families to proactively engage with their financial futures in the heat of the tax moment.”

Think of the tax program as a springboard. Let’s say a client gets a tax refund of $200. The tax preparer learns that the client has a bad credit score. This is where a referral comes in. In this case, MEDA’s free Financial Capability workshops, followed by one-on-one coaching, with the possibility of a Secured Credit Card being opened. (There were 100 applications for Secured Credit Cards that were opened this year, the majority of which came from tax refunds that were returned to the community.)

Maybe the tax preparer learns the client is out of work. Then it’s time to send them to MEDA’s Workforce Development program for job training, resume refinement and mock interviews, leading to employment.

If it’s discovered that a tax client is a budding entrepreneur with a microbusiness idea, then MEDA’s Business Development workshop is in order, with everything from lease negotiation to social media marketing learned.

Tax Program Manager Max Moy-Borgen well knows the importance of other programs stepping in after his clients sign their tax return on the dotted line. He tells of the need: “’Taxes Plus: Go Further with MEDA’ builds off of the success of the free tax preparation program that annually serves over 3,500 of the 5,100 clients that receive services from MEDA. This means whether or not you want to start or expand a business, build savings, grow, establish, or improve your credit, lower your debts, or increase your income, buy a home, enroll in a public benefit–or any other program that MEDA offers–you will have the opportunity to do that through the tax program because it is integrated with MEDA’s other services.”

Take the story of Guatemalan immigrant Jose and his wife, Claudia, who came to MEDA in 2011 to do their Individual Taxpayer identifications Number (ITIN) applications. Jose was the clan’s sole wage earner, with a modest, annual income of just $20,000.

Preparing the family’s taxes garnered them a refund of nearly $800–nearly a four percent increase of their annual income. The couple left Plaza Adelante relieved and happy.

Jose and Claudia have returned to MEDA to do their taxes every year since, as they are satisfied with the free tax preparation services they are receiving.

In June of 2014, it was discovered by MEDA’s tax team that Jose had a zero FICO score, common with immigrants who have no credit history in this country. MEDA’s Financial Capability program suggested Jose open a Secured Credit Card, which he immediately did.

Flash-forward a mere five months later to today and Jose’s credit score is already 735 (a credit score over 720 is deemed excellent.)  This FICO score is good enough to apply for a regular credit card or a car loan. The family is now on its way to financial strength, thanks to the tax team finding a need and referring the clients to another program at MEDA.

Summing up this client success story, and others she sees at MEDA, Financial Capability Program Manager Jackie Marcelos states, “’Taxes Plus: Go Further with MEDA’ is a tool that allows families to use their tax refunds to get in the habit of monitoring their transactions. By making good decisions, they are able to establish and improve their credit. It’s about asset building. ‘Taxes Plus: Go Further with MEDA’ is a model for other nonprofit service providers to follow.”