06 September 2022 | Tax and Budget

Creating a More Effective and Equitable State EITC

Karuva Kaseke | September 6, 2022

Tens of thousands of Kansans excluded from tax credit for working families

The Earned Income Tax Credit (EITC) is one of the most effective programs in our tax code. It is a tax credit for working people with low incomes and is a proven way to alleviate poverty. However, in Kansas, many households filing taxes using an Individual Taxpayer Identification Number (ITIN) are unable to receive these benefits.

What Is the ITIN?

All wage earners, regardless of immigration status, are required to pay federal taxes. The IRS provides ITINs to those who are ineligible to receive an SSN so they can comply with tax laws. An ITIN does not authorize a person to work in the United States, provide eligibility for Social Security benefits, or provide a person with immigration status.

Who Are ITIN Filers?

ITIN filers represent a diverse group of working taxpayers, including:

  • Undocumented immigrants;
  • Certain student visa holders;
  • Spouses and children of people with visas tied to employment; and
  • Survivors of trafficking, domestic violence, or other serious crimes.

Especially for those with unauthorized immigrant backgrounds hoping to have the opportunity to legalize their immigration status and become U.S. citizens, filing taxes is important to:

  • Demonstrate compliance with federal tax laws;
  • Further contribute to the state and national economy;
  • Help prove “good moral character”; and
  • Document work history and physical presence in the United States.

Immigrant ITIN Filers Make Significant Contributions to Our State

In addition to paying income taxes, non-citizen immigrants also pay sales, excise, and property taxes (either directly as property owners or supporting their landlord’s payments through rent) like all other Kansas residents. In fact, a 2017 report estimated that undocumented immigrants in Kansas were contributing nearly $68 million in state and local taxes each year, working in typically low wage essential industries like food service, manufacturing, and construction.

ITIN Exclusion Hinders the Tax Credit’s Effectiveness

“Mixed-status” households refer to households where some members of the family have an SSN through authorization, birth, or naturalization, while other members of the family have an ITIN. Disqualifying the entire household from receiving the EITC for one sole member with an ITIN affects ITIN filers themselves, as well as spouses and children who are U.S. citizens and authorized immigrants.

In Kansas, close to 33,000 adults and 29,000 children are estimated to live in households that file taxes using an ITIN.

  • More than 19,000 ITIN Kansas tax returns filed annually meet all eligibility criteria for the EITC except for the SSN requirement.
  • Assuming participation rates are comparable to the Kansas EITC, eliminating the SSN requirement would result in an estimated 12,820 additional Kansas households receiving the EITC each year, which could add approximately $1,000 to their earnings.

Children living in “mixed-status” households in Kansas miss out on the benefits of the EITC. Denying the EITC to ITIN filers and their entire households undermines the effectiveness of the credit and denies support to hardworking, tax-paying families.

It deprives children and families – many of whom are U.S. citizens and authorized immigrants – the benefit of a tax credit proven to bolster well-being and future outcomes. It makes life harder for low-wage workers playing vital roles in the Kansas economy, even as they contribute to building the state through their tax dollars. Extending eligibility for the state’s EITC to include ITIN holders would make the program more inclusive and increase its impact, allowing the credit’s benefits to reach more Kansas families and communities.

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