Low-income families might soon benefit from substantial savings when it comes to their annual income tax payments.

The Internal Revenue Service (IRS) has recently teamed up with the Department of Housing and Urban Development (HUD) to relieve some of the financial hurdles that lower-income families face when it comes to tax time.

The two organizations have made a commitment to work together to eliminate some of the annual income tax burdens that low-income families, disabled people, elderly people and people with limited knowledge of the English language face by implementing a series of initiatives.

The IRS and HUD partnership initiatives involve offering various tools to low-income individuals. The first initiative involves offering free tax preparation and electronic filing of federal tax returns for low-income families. The IRS and HUD also plan to offer these people access to important tax information with educational outreach programs.

Low-income families will learn how tax credits can be used to build assets and how Earned Income Tax Credits, childcare tax credits and individual development accounts can benefit their household as well.

The idea behind the partnership is to make low-income families (and individuals) aware of the lesser known credits and loopholes that can lower their tax payments.

For example, each year over 20 million families qualify for the Earned Income Tax Credit (which can be worth over $4,000) but many, who are unaware of this credit, fail to claim it and miss out on the money.

This new partnership between the IRS and HUD will not only serve to educate the underprivileged it will also emphasize greater coordination between the two agencies. The result will be increased information sharing abilities and the expansion of existing client services.

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