In 2011, one in four Chicagoans filing taxes claimed the Earned Income Tax Credit, according to IRS data published by the Brookings Institute. The average refund was more than $2,500.
That amount of money can be a financial boon for low-income workers and their families. Yet many don’t know they’re eligible for the EITC, a refundable credit designed for lower-income earners, particularly those with children, and other benefits. And often the process — identifying the proper paper work, then filling it out accurately (there are more than 20 separate determinations for the EITC alone) or paying to have it done — is enough to deter many from filing at all.
The Brighton Park neighborhood on Chicago’s Southwest Side is one of many areas in the city home to working poor families that could potentially benefit from federal tax credits like the EITC. The Brighton Park Neighborhood Council partners with the Center for Economic Progress, as part of its Live United Neighborhood Network initiative with the United Way, to provide pro-bono tax preparation, ensuring working poor families maximize their refunds.
To qualify for the service, an individual or couple must meet the same eligibility requirements as the EITC. Since the service began last year, the BPNC has serviced more than 200 workers . It hopes to serve 400 by the end of the season.
Patrick Brosnan is the executive director of the BPNC and spoke to The Chicago Reporter about the service and the challenges low-income workers face during tax season.
How did the BPNC begin helping low-income workers with their taxes?
The United Way looked at a menu of services they’re funding in other communities and have reached out to some of those agencies to see if they’d be interested in expanding. One of those services was the tax site. We looked at it as a wonderful opportunity because it really marries a lot of the work we’re already doing around financial literacy, stability and family financial planning. We don’t have to do anything more than help families fill out their taxes. A lot of families who have multiple W-2s don’t even file their taxes because they don’t think they make enough money, they don’t get around to it or they don’t have that relationship with the federal government or the IRS. They’re either hiding from the IRS, aren’t aware of things like the Earned Income Tax Credit or don’t really understand what they’re eligible for. This service allowed us to begin talking to families about this.
How does the service work?
It’s the Center for Economic Progress’ model, so it’s their infrastructure and they’re staffing and training. We identify the volunteers and the space. Last year was the first year and we did it at Thomas Kelly High School. But it was only a partial site, so it was only open a couple days a week for an abbreviated tax season. We helped 70 families last year and the average return was about $2,500 to $3,000. It was a real significant economic boon for this community, because for many of these low income families, this is the single biggest infusion of cash they have in the whole year. So it’s really a big deal. This year, we were able to get United Way to agree to fund a full tax season with the CEP here in the community at Shields Middle School.
Who are the volunteers who perform the service and where do they come from?
It’s everybody from people with financial backgrounds and people who have done taxes for corporations, to people who have never looked at a tax return in their life. But everyone goes through a really intense, thorough training. There is a tax expert from the CEP at the site who’s there to answer any questions and help if there are any issues, because these aren’t usually normal tax returns. Usually, there are a lot of different types of incomes — cash, 1099s, all sorts of things — that people receive. People who are coming to us usually don’t have all their stuff in order, so that’s something we have to figure out.
Besides the IETC, what other kinds of benefits are families usually eligible for?
There are a lot of childcare credits, education credits and all sorts of deductions that families don’t know how to fill out. A lot of times families are going to tax services to get their taxes done and they have to pay. It’s good service, but they pay for it. Here, it’s free, so they get to keep that money and their return.
Where are the workers from?
Most everybody is from Brighton Park because we’ve been localizing our outreach efforts to this area. We won’t turn anybody away, but there are other centers like this in different parts of the city. If people call, we’ll try to send them to the place that’s closest to where they live.
What are the consequences low-income workers face if they don’t file their taxes?
There’s obviously a legal consequence. If the federal government owes them money, then it would tend not to go after them for not filing your taxes. If they owe the federal government money, there’s is always the potential they would be audited, but it’s not very common. Then there is the money they leave on the table because they’re not getting their benefits. And now, with the Affordable Care Act, you have to file federal taxes to qualify for a lot of the subsidies.
How many W-2s do most workers typically have?
It’s definitely multiple from what we’ve seen this year. Typically, it’s two to five, but there are some people who have seven, eight or nine. The number of jobs people have is striking. This myth Paul Ryan has come out with about the urban worker — or “not-worker,” just sitting at home — we’ve seen the exact opposite. We’ve seen people working many jobs throughout a year, struggling to find work and struggling to get through times when there are no jobs available, as with seasonal or construction workers. In some cases, they can’t work enough hours during certain parts of the year because you can only work so much. Those kinds of myths — that people don’t want to work — are just completely false and not rooted in any realities we’ve seen.
For low income families, what do benefits like the EITC mean?
We’re seeing the average return is over $2,000, so you can imagine what that means for a family whose income last year was $10,000 — that’s 20 percent of their income for a whole year. That puts them in a much different financial position. We’re working with the CEP on financial literacy for families with big refunds so they don’t spend the money right away. Everything in our economy says to do that. Imagine you’re a low income family. You want to treat your kids and enjoy it. A part of it is imagining what this money could look like in six months when they’re out of work. What could this money look like in a bank account? Do they have a bank account? So we’re trying to pair this tax service with a financial literacy curriculum to help families make decisions that would allow that money to last.