State Sen. Dave Koehler and state officials were in Peoria to talk about how low-income people can use their tax refunds as part of a new program to help them buy a home.
Low-income families dreading the looming tax season now have an option that can maximize their savings and ultimately help buy them a home.
Those who take advantage of free tax preparation offered by the Center for Economic Progress to low-income families will be informed of the Asset$Illinois Homeownership Initiative, a new program designed to help those families buy a home by providing a dollar-for-dollar match on savings up to $2,000. The program is expected to help as many as 1,000 Illinois families.
Officials urged taxpayers to sign up for the free tax preparation, offered in more than 30 locations throughout the state, and apply for the Illinois Earned Income Tax Credit (EITC).
State Sen. David Koehler, D-Peoria, said the program should be a great way for low-income families to build toward their future.
"This is one of the best programs that really gets to the issue of how to help working families build wealth," he said. "If you are a family that is not familiar with preparing taxes, this becomes an alternative. If we are really serious in this country to helping people get out of poverty, then we have to provide these kind of opportunities."
The Center for Economic Progress helps prepare taxes for those unfamiliar with the filing process and allows them to receive the maximum amount of savings. In 2007, the center prepared taxes for 692 accounts in Peoria, amounting to $976,512 worth of refunds.
After the free tax preparation, participants will be encouraged to apply for the Illinois Earned Income Tax Credit and use their tax refund to invest in the Asset$Ilinois program, offered by the Illinois Department of Human Services, to help build a foundation of assets to move out of poverty. After completing the application process, participants must open a savings account and set up the required monthly automatic electronic transfer from their savings or checking account with the state’s help.
"Illinois will be the first state to intentionally and deliberately tie no-cost tax preparation services to asset building opportunities for low-income families," said Greg Diephouse, the director of the Illinois Department of Human Services.
Officials also encouraged taxpayers to avoid using refund anticipation loans, where tax payers using independent tax services can get instant refunds.
Kevin Richards, manager of the Illinois Electronic Commerce Division, said these loans can drive up interest rates and said a smarter solution would be to file taxes online.
"Every year more people discover the benefits of E-filing, which include increased accuracy, confidence, convenience and control," he said. "If they file taxes electronically they can go to our Web site and file their return for free and we link to the federal program as well as some of the other sites where you can go for free service."
Brian Feldt can be reached at (309) 686-3194 or email@example.com.