New benefits

There is a lot of controversy regarding President Obama’s changes toward undocumented immigrants and how they report earnings. Under current law they are issued an ITIN (individual taxpayer identification number) and they file taxes using that number. They are not eligible for tax credits. With the new rules they will be issued a social security number and will qualify for these benefits. Here is an example based on a tax return I just finished this week. A single mom age 23 with a 3 year old child. The Grandma babysits so this lady can work and she earned $13,600 last year and paid no federal or state income tax. Because she has a social security number she qualified for $3,305 from the earned income credit (EIC) and $1,000 from the child tax credit plus $1,040 from the MN working family credit. People who now have an ITIN will qualify for these benefits and will be allowed to refile the last three years and get these benefits. In this example this amounts to a windfall benefit of $21.360. These benefits are for single parents with one child who earn less than $44,000 per year. Having this SS number will qualify these individuals for disability benefits, retirement benefits and survivor benefits under the social security program. In addition there are a number of benefits under public assistance that now become available. These changes will provide benefits to low income people and will be paid for by either collecting more from higher earners or debt financing.