Like many single parents, Sarah Desenclos struggles at times to make ends meet.
The 37-year-old mother of two makes between $40,000 and $50,000 per year as an office assistant but still manages to find the resources to cover her household bills, keep her car running and help her daughter with college tuition.
What Desenclos does — and many other low-income householders in Connecticut don’t — is take maximum advantage of all the tax relief to which she’s legally entitled.
By participating in the free taxpayer assistance that many nonprofits offer statewide, Desenclos says her federal and state income tax refunds often exceed $5,000 and sometimes reach as high as $10,000.
But according to the United Way of Connecticut and SimplyCT, a Stamford-based tax assistance nonprofit, an estimated 45,000 low-income Connecticut families failed to claim their full federal income tax benefits three years ago, forfeiting roughly $120 million.
“Every year, they make sure I’m on top of it,” Desenclos said, referring to the tax professionals she’s seen annually at SimplyCT since 2012.
And each year, they remind her the federal child tax credit, the Earned Income Tax Credit and other relief programs are there for her and her children.
“That’s the first thing they talk about: ‘What are we doing for Olivia and Brenden?’” she said.
High stakes surrounded 2021 tax year
But while thousands of Connecticut families in need don’t claim their full tax benefits, the situation surrounding 2021 was particularly dire, said Juan Berrios, executive director of SimplifyCT.
That’s when Congress temporarily expanded the federal child tax credit program.
A benefit of $2,000 per child rose to $3,000 for kids ages 6 through 17 and to $3,600 for those younger than 6.
And while Congress allowed the enhanced benefits to expire after 2021, filers still can submit late and amended claims.
The benefits don’t fully expire until April 15, Berrios said, but the United Way of Connecticut and SimplifyCT are amid a campaign that runs through Nov. 30 to reach families that missed out.
The IRS traditionally shuts down certain tax processing operations during holiday season to gear up for the post-New Year’s Day tax-filing season, Berrios said, making this fall the best time to get unexpected assistance to families soon.
More information about SimplifyCT and the United Way’s program can be found by calling 860-590-8910 or online at www.simplifyCT.org.
Households that earn less than $67,000 per year are eligible for free tax-filing assistance, Berrios said, adding that many of those that have missed federal tax benefits earn considerably less than that.
But the director of SimplifyCT said the assistance campaign isn’t just about helping these households correct the oversights of 2021.
Low-income households forfeited an average of $2,667 in federal tax benefits in 2021, and it’s likely many families in need are missing out similar amounts every year.
In addition, Connecticut provides an Earned Income Tax Credit against the state income tax that is worth 40% of the federal EITC, one of the largest of such tax breaks for working poor families in the nation. The Connecticut EITC distributes close to $200 million annually, spread among about 185,000 tax filers.
Many families that fail to capture their full federal income tax credits in 2021 likely are missing them year after year — and their full state breaks as well.
“There’s a strong hypothetical chance … you’re still missing out,” Berrios said.
The United Way’s Connecticut chapter is one of several groups leading a push next year to establish a child tax credit within the state income tax system to complement the benefit within the federal system.
More than 1,230 supporters already have registered for an online petition backing that effort.
And Berrios said as more residents work with nonprofit tax assistance, they also are likely to keep abreast of this relief if the General Assembly and Gov. Ned Lamont approve it during the 2025 session.
State Comptroller Sean Scanlon, who began the push for a Connecticut child tax credit in 2021 when he was serving in the House of Representatives, had proposed a $600 per child benefit up to a maximum of $1,800 per household.
The comptroller, who continues to advocate for a state child tax credit, said he expects that will be part of a much larger budget debate next spring, though he noted there also are strong advocates pushing for greater state investments in education, health care, social services and municipal aid.
“This is the impossible jigsaw puzzle of government,” he said. “My former colleagues and the governor are going to have a lot of competing priorities.”
The United Way also released a report last month showing nearly two out of five Connecticut households lacked the income to cover a realistic survival budget in 2022. And that the overall number of households in poverty statewide continues to trend in the wrong direction.
That report, which examines ALICE or Asset-Limited, Income-Constrained, Employed households, found a family of four needed to earn more than $108,000 in 2022 to live above the poverty level in Connecticut. And that was assuming this family took full advantage of all available tax relief.
“The ALICE data tells us that more families than ever are struggle every month to make ends meet,” said Lisa Tepper Bates, president of the United Way of Connecticut. These working poor families pay taxes, and “these benefits are critically important to them,” she added.
Carstensen: CT has a chance to boost its economy
Securing these benefits also could give a valuable shot in the arm to a state economy that has grown marginally since 2007.
Because of Connecticut’s high cost of living, most households being targeted are unable to save any of their federal or state income tax refunds, said University of Connecticut economist Fred Carstensen, who heads the Connecticut Center for Economic Analysis.
That means any tens of millions of additional refund dollars reclaimed by these households likely will be pumped right back into the local to cover food, housing and utility costs and other necessities.
“It doesn’t go for trips to the Bahamas,” Carstensen said. “It doesn’t leak out of state.”
There’s another benefit to more households claiming available tax relief, at all levels of government, said state Department of Revenue Services Commissioner Mark Boughton.
Tax filings provide a wide array of information that helps legislators and state agencies determine what levels of social assistance are most needed, said Boughton, whose department refers thousands of households annually to the Volunteer Income Tax Assistance program, or VITA, another nonprofit serving most regions of Connecticut.
Tax “data helps craft better policy,” he said.