Two bills pending in the Illinois General Assembly call for the expansion of a tax credit that has been seen as an anti-poverty program because it provides relief for low-income households.
If not for immigration status, Martha Cruz and her family of five would likely be eligible for a tax credit aimed at working families that could result in a refund.
But Cruz, 40, of Back of the Yards, won’t qualify for the federal or state versions of the Earned Income Credit because she and her husband each use an Individual Taxpayer Identification Number when they file their taxes. They’re immigrants and don’t have Social Security numbers.
A push to expand the eligibility of the Illinois Earned Income Credit could soon become reality through two pending bills in the Illinois General Assembly.
The proposed expanded eligibility for the state’s version of the credit would include immigrants like Cruz who use a taxpayer identification number to file taxes, people 18 to 24 without children, and people 65 and older without dependents who fit the income requirements.
The bills also call for including unpaid caregivers who have a qualifying dependent such as a child under the age of 6, a senior or someone with a disability.
The federal and state versions of the Earned Income Tax Credit are refundable tax credits that provide taxpayers a refund check. Some people who qualify for the credit earn so little that they might not owe taxes on their wages, resulting in a refund of the entire credit, said Daniel Rahill, a managing director in wealth strategies at Wintrust Wealth Management, who has helped people apply for the credit while volunteering.
“You could see the power of it,” Rahill said. “This is a really good thing for families. The tax law should be used, if you will, for societal change in helping those less fortunate, and this is an example of it.”
For tax year 2020, the federal credit ranges from $538 — for those without children — to $6,660 — for those with three or more children, according to the IRS. On top of that, Illinois residents also qualify for the state credit, equal to 18% of their federal credit.
The recently signed American Rescue Plan Act dropped the eligibility age for the federal credit to 19 for tax year 2021, Rahill said.
Cruz’s husband makes about $30,000 to $35,000 a year to help support their family, which includes three children. The couple’s oldest child is 19 and no longer lives at home. Cruz thinks a bigger refund could help her family buy a car, pay off debt or put money toward savings.
“Maybe in the future we would have the opportunity to buy a house,” Cruz said in Spanish. “Maybe, that’s our wish to have our own house.”
Since 1975, the federal Earned Income Tax Credit has targeted working families, and is largely seen as an anti-poverty program, according to the IRS website.
In Illinois, there were 908,000 Earned Income Tax Credit claims as of December, according to the IRS.
Mayor Lori Lightfoot and Illinois Comptroller Susana Mendoza recently announced they were providing relief this year to families who receive the credit by not withholding money from tax refunds to pay outstanding traffic fines, parking tickets or court judgments.
State Sen. Elgie Sims, D-Chicago, is leading the Senate version of the bill. He sees the expansion as a tool to combat poverty and inequality.
The bill is in the early stages of the legislative process.
“I look forward to having conversations on the entire proposal and getting their input and hearing their perspective,” Sims said of potential opponents. “I can tell you right now, I have heard nothing but positive responses to the proposal.”
Ruby Mendenhall, an associate professor at the University of Illinois at Urbana-Champaign, has done research in whether it’s better to distribute funds from the tax credit in one lump sum or in gradual payments. She became interested in the credit because she sees it as a form of social mobility.
She found a majority of people used the funds for bills and debt while a smaller percentage went toward savings. Others also used it to support a child in college.
“You just think about the recession and how hard it was, the housing crisis and how hard it was for people to come back and then COVID,” Mendenhall said. “I would say this is the moment to think about how do we cover as many people in a society that needs income support.”
Cruz, of Back of the Yards, said her husband contracted COVID-19 in April and couldn’t work for about a month. Her husband’s hours were temporarily reduced at his metal fabrication job. And due to immigration status, the family also has been left out of all three rounds of federal coronavirus aid.
“Especially in these times that we live in, I think many families are going through difficult times,” Cruz said.
Michelle García, an immigration and Latinx community organizer for Access Living, said she’s gotten calls from people in the past year struggling to pay for their medication and bills. She’s sometimes sent some of her own food to families. Access Living, an advocacy organization for people with disabilities, is among a coalition of groups pushing for the eligibility changes to the tax credit.
García said some immigrants with disabilities are already left out of programs like Social Security.
“Now with this pandemic, it really has hit home,” García said. “Having this eligibility to qualify for something like a $600 credit, for being put as a dependent or if you are an ITIN filer, having that availability to have something in a return, that’s a huge help.”
The expansion push calls for a minimum of a $600 credit to unpaid caregivers such as those who have dependents with disabilities.
Jenna Severson, a spokeswoman with Economic Security for Illinois, which advocates for working people, said the push to expand the earned income credit predates the pandemic. She said the past year has hit women and caregivers the hardest with many having to stay home to take care of children or other dependents.
Economic Security for Illinois, working with the Institute in Taxation and Economic Policy, estimates that as many as 500,000 households would benefit from the expansion, including 110,000 immigrant households.
Johnnetta, of Austin, said she had to quit her job to take care of her 5-year-old daughter, who has cerebral palsy, after schools were shut down last March.
“I didn’t expect this to happen,” said Johnnetta, who asked that her last name not be used for privacy concerns. “I wasn’t prepared for this.”
While her daughter has gone back to school, she has already been sent home a couple of times because of COVID guidelines. She’s felt like she’s scraped by this past year and sees the possibility of a bigger refund check as a way to keep afloat by paying her bills and buying household essentials like milk.
Margot Zamora, of Berwyn, had started working a couple hours a day doing home care services when the pandemic caused her to stop working. She has two children, including a child with disabilities; her family is considered a mixed-status home with various immigration statuses.
Like Johnnetta, Zamora said she would use a refund check to pay household essentials including rent and utilities.
Zamora said her family didn’t receive any of the stimulus checks, and her husband’s wages have gone down. They’ve survived by using food pantries and with help from local groups.
“It’s how we’ve gotten by so far with the help from the community,” Zamora said in Spanish. “We have helped each other.”
Elvia Malagón’s reporting on social justice and income inequality is made possible by a grant from The Chicago Community Trust.
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March 21, 2021 at 04:35PM