Collaborating with human services agencies to connect eligible residents to tax credits in Illinois
State of Illinois Department of Revenue and Department of Human Services
August 2024 - January 2025
Why This Matters For Families
Across the country, millions of families are living paycheck to paycheck, struggling to afford their basics on low to moderate incomes. For decades, the Earned Income Tax Credit (EITC) has been a critical support instituted by the federal government and over 31 states and territories to provide families with thousands of dollars after filing their federal and state taxes. Tax credits have become a critical anti-poverty program in the United States, providing an essential source of cash for many American workers and families. This was underscored by the 2021 expansion of the Child Tax Credit (CTC) in the American Rescue Plan, which reduced child poverty in the United States by 40% that year.
However, accessing credits like the CTC and EITC is notoriously difficult: families either don’t realize they’re eligible for the credits, and thus fail to claim them; they claim some of the credits but not all of the ones for which they’re eligible; or they don’t file taxes in the first place — oftentimes because they don’t meet the income level to legally require filing in the first place.
The bipartisan, highly successful EITC reaches only 80% of eligible households nationwide, with lower-income, less-educated households being most likely to leave money on the table compared to other populations. The IRS estimates that roughly 20% of EITC-eligible and CTC-eligible individuals do not receive the credit payments they are owed — the federal EITC alone averaged $2,500 per return in 2022.
In Illinois, the state EITC can help families receive up to 20% of their federal credit, helping to not only reduce the dollar amount they’re liable to pay back in taxes, but also to get a refund if the credit is greater than the amount they owe. The state also recently implemented a CTC to help families as well. The state has been interested in getting as many families as are eligible to claim the credit to help reduce the impacts of poverty, but doing so often requires families to navigate the often complex and frightening world of federal and state tax legislation.
Implementation Challenge
In Illinois, where the average EITC amount in 2023 was more than $2,500 per return , participation in the program has hovered around 75%, peaking at 81.1% in 2021.
Getting more eligible families participating in the program has been a focus of the state, which has been working with New America Chicago on implementing a pilot program to increase uptake of the state EITC for federal tax filers. By leveraging IRS data, the state began doing outreach to Illinois residents who claimed the federal EITC and who likely qualify for the state credit, but did not file an Illinois income tax return. The pilot successfully aided over 22,000 Illinoisians in accessing the state EITC that they may not have otherwise accessed.
But federal, non-state filers are just a smaller subsection of the eligible pool; there are also thousands of non- and irregular filers — those who have not filed state or federal taxes in the last three years — who are entirely missing out on the EITC program, and cannot be contacted via IRS data.
To access and address this field of non-filers, the New Practice Lab in partnership with New America Chicago has engaged with the state of Illinois to understand the landscape of non-filers in the state, and to come up with creative methodologies for outreach to simplify access and reduce the barriers to the vital tax credits.
The goal for the New Practice Lab is to be able to offer Illinois tangible learnings and technical insights that can be used to increase uptake for non-filers of the state EITC.
Our Approach
This project builds on the New Practice Lab’s landscape research (which outlined who non-filers are, and what concerns they have around engaging with the tax system) through in-depth qualitative research focused on Illinois.
Working with New America Chicago and their local partner, COFI, the New Practice Lab was connected with low-income families to hold virtual interviews in both English and Spanish to understand their mindset about filing, including how they feel about state agencies like the Illinois Department of Revenue (IDoR) and Illinois Department of Human Services (IDHS), their concerns about information sharing between the agencies that could ease tax-related outreach, and how much —regardless of filing experience —they knew about the tax credits available to their family. In addition to virtual interviews, the Lab hosted an in-person workshop in Southern Illinois.
Additionally, this project began the work of collaborating with multiple government agencies across the state of Illinois, including the Department of Revenue and the Department of Human Services, to understand whether information could be shared between them to increase tax credit uptake. The goal of this partnership is to identify eligible non-filers who already engage with the Department of Human Services through programs like SNAP and connect them with the Department of Revenue for assistance in claiming tax credits. The theory of this engagement is that once a non-filer has been identified, the Department of Revenue can educate them about the benefits of filing and then with the taxpayer’s permission pull together all existing data about the individual (such as W-2 forms reported by employers) to make it faster and easier for them to file. This can benefit individuals in a number of ways, ranging from access to credits like the EITC to direct reimbursement for overpayment, such as correcting excess withholdings.
What We Learned
Participants were interested in the opportunity to have the IDHS connect them with the IDoR, as long as it had been clearly communicated. A program that would allow the IDHS to share information with the IDoR to help individuals file taxes and claim eligible credits was compelling to respondents — but only after plain language was used to describe the specific types of information being shared. When participants understood the limited scope of data being shared, they were more receptive and enthusiastic for the program.
IDHS involvement helped to boost trust with IDoR. More participants were familiar with the IDHS than the IDoR. While an explanation of IDoR’s expertise in taxes as a benefit of the program helped to foster greater levels of trust, some immigrant families anticipated that not all families in their community would be comfortable engaging unless they knew that their personal information would not be shared with immigration or law enforcement agencies.
Families are wary of hidden fees. Participants expressed a strong preference for transparency, requesting clear, itemized summaries of refunds before committing to filing, and emphasized the importance of clearly communicating that the program was free of charge.
There is a lack of awareness about tax credits. While familiarity with the EITC varied — largely based on families’ previous experience filing taxes — it was often confused with the CTC. Additionally, families were surprised that their income qualified them for credits, even if they fell below the federal filing threshold, as well as by the amount they could potentially receive. Many ITIN families did not know that they were eligible.
Messaging should reflect the diverse needs and motivations of families. One-size-fits-all approach to outreach to families misses opportunities to connect with families based on their specific needs and barriers. Families generally fit into certain archetypes, and messaging should be tailored to focus on those needs, as well as use terms like “benefits” or “money” rather than “tax credits” — which potentially alienate individuals who were not already planning on filing taxes.
Early notice is essential. Families expressed a preference for receiving information well in advance of tax season to avoid missing out on a free filing option, and to avoid confusion with other offers from tax preparers or advance loan services.
Multi-channel communications strategies and partnerships with community organizations is essential. Families were hesitant about outreach that relied purely on the postal system, and thought it would be helpful to receive the same message through email and text as well. Physical forms were a general preference, but having digital options was appreciated. Many participants also highlighted community organizations like the school system, libraries and doctors offices as being important avenues for learning about benefits.
Participants want reliable, event-driven notifications. Like a purchase on an e-commerce site, participants have come to expect timely, event-driven notifications that offer status updates on their filing. A notification confirming receipt after submitting the filing, for example, is important, as are status updates regarding the processing of their return and refund.
Families need ongoing support. The complexity of the tax system creates a system of fear for many families, who want to be able to follow up with the IDoR or other support individuals if they have questions — both online as well as over the phone.
Next Steps
New America Chicago is exploring the possibility of expanding this line of research and action. In partnership with COFI and a local coalition of advocates, New America Chicago will work with state policymakers to implement solutions over the next two years to simplify the process of learning about and receiving the state tax credit for low-income, working families.
The New Practice Lab has released a research paper that integrates this research into a national study.
The Lab is also exploring additional projects with state departments of revenue to bring some of the ideas in this project to life (such as improving tax-related outreach materials that are given to IDHS service recipients).
Read More
“Designed for Filing, Not for Families” National Tax Filers Survey
