WASHINGTON — Three years ago, fresh out of my Midwestern college, I set out on an endeavor to help the American people. I headed down South to join AmeriCorps.
As an AmeriCorps member, I rerouted a National Forest trail so that hikers in North Carolina would be led away from the brink of a treacherous waterfall. I provided disaster relief with the American Red Cross during the 1997 floods in Pennsylvania. I tutored second-graders in a South Carolina school, helping them to learn to read. I helped build a house in Virginia with Habitat for Humanity. I learned a lot about what it is to be an American citizen.
The generosity of this country was overwhelming. In return for providing 1,700 hours of national service, I received a $4,725 educational award to pay past student debt or for future higher education. For some, this education award is central to their reasons for serving, since without it, they are unable to attend college. For others, it is a nice benefit in a year lacking in financial benefits.
What I and many others didn't anticipate is that the tax consequences would be devastating.
When I decided to use my award, the Treasury Department transferred the $4,725 to my graduate school. I never saw any of that money and never had an opportunity to withhold 15 percent of it for taxes.
So on April 15, when I was near the end of my school year and near the end of my budget, I had to include the $4,725 in gross income. This almost doubled my meager income from work-study wages and a summer-research job. The consequence of redeeming my educational award was paying more than $900 in federal and state taxes instead of receiving a $300 refund.
The frightening part is that my story is a mild one. Thousands of former AmeriCorps members have experienced far worse tax consequences.
People have had to pay penalties and set up payment schedules with the IRS. They have had to cash in trust funds left by deceased parents. Some people who qualify for food stamps also qualify to pay $1,200 in taxes just because they served their country and then sought to receive an education. Isn't providing community service and pursuing higher education the sort of behavior our government wants to encourage and not to penalize through the tax system?
This year we've seen tax and education bills designed to promote saving for children's education through IRAs and employers, and aimed at medical students who provide health care to underserved populations. Eliminating the taxation of the AmeriCorps education award would be the inexpensive and fair thing to do for those who have served America and are just seeking an education.
* Jennifer Phelps is getting a master's degree in public health at Johns Hopkins University in Baltimore and a law degree at Georgetown University in Washington.