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Warren Fiske
By Warren Fiske March 9, 2015

John Fredericks says every illegal immigrant can be eligible for up to $38,000 in tax credits

John Fredericks, a conservative radio talk show host whose program airs across much of Virginia, has been incensed for months that President Barack Obama bypassed Congress to extend legal status to millions of immigrants.

Adding to the outrage, Fredericks says, are recent disclosures that all of these immigrants can be eligible for big tax breaks. Here’s a comment Fredericks made on his Feb. 28 show:

"Now we find out that every one of these illegals who came into this country illegally, that worked illegally, broke the law a number of times, now they can be eligible for up to $36,000 to $38,000 in earned income tax credits without paying a dime in."

Fredericks made the statement during an interview with U.S. Rep. Bob Hurt, R-5th. Hurt, no fan of Obama, replied, "It’s an absolute nightmare." On the same show, the radio personality repeated himself during an interview with U.S. Rep. Morgan Griffith, R-9th. Griffith replied, "I’m fighting like crazy to stop this president and his bad policies that are detrimental to the United States of America."

The so-called "amnesty bonuses" have become a talking point in conservative circles. We wondered whether Fredericks is right that, under Obama’s policies, every illegal immigrant could become eligible for up to $38,000 in tax credits -- even if they haven’t paid taxes.

The tax credit

Obama announced on Nov. 20 that he will delay deportation of immigrants who have lived illegally in the U.S. for more than five years but have children who are citizens or have green cards. If the applicants pass background checks and pay a fee, they would qualify for a work permit and avoid deportation for three years at a time. More than 4 million people could qualify for the program, which is scheduled to open for applications this spring but faces a legal challenge from 26 states.

Those who qualify for the program would also be able to get a Social Security number because a longstanding policy allows people who have been legally present in the U.S. to obtain the numbers. And with that Social Security number, they would be required to file tax returns and possibly qualify for the earned income tax credit that helps low-income workers.

But there’s more. The reclassified immigrants also would be eligible to file or amend tax returns going back three years, provided they can meet income requirements and furnish pay documents. In other words, some will be able to claim four years of credits -- for their current tax filing and three years of back filings.

The earned income tax credit slides with the amount of earnings families report and the number of children they have. It’s also adjusted each year for inflation. The maximum amount a family with three or more children can claim this year on their 2014 tax filings is $6,242. The top amount that could be claimed over the last four years, according to IRS documents is $24,320 -- well short of Fredericks’ claim.

Of the 28.8 million families that applied for the tax credit on 2012 filings, only 3.5 million -- or 12 percent -- had three or more children, according to IRS figures. To qualify for the maximum credit, those families’ taxable income could have been no greater than about $23,000 a year. Only 1.3 million of those three-child or more families fell into that category, according to computations of IRS data by John Wancheck, who coordinates a program to publicize the earned income tax credit for the Center for Budget and Policy Priorities.

In other words, only 6.4 percent of families applying for the tax credit in 2012 were eligible for the maximum benefit of about $6,000. The average credit was $2,407. So it’s likely, Wancheck said, that only a small percentage of reclassified immigrants would qualify for the maximum, three-child credit any given year, yet alone four years in a row.

Wancheck said certain issues may deter immigrants from trying to recoup the credit from past years: Many may not have the tax records necessary to file back returns; others may be reluctant to go through the hassle for what might end up being a small reward.

IRS Commissioner John Koskinen recently told Congress that his agency has not estimated the cost of extending the tax credit to reclassified immigrants.

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So how did Fredericks come up with the $36,000 to $38,000 credit that he said "everyone of these illegals...can be eligible for?"

Fredericks sent us an email noting that in 2013, the maximum credit for three children or more was was $6,044. "So two single illegals living together filing separately with 6 or more kids in the household can claim 3 each and it’s 6,044 x 2 = $12,088 x 3 years = $36,264," he wrote.

It’s possible that Fredericks’ hypothetical households exist, but odds are there aren’t many of them. As we’ve noted, 6.4 percent of the families that applied for credit in 2012 qualified for the maximum three-child benefit. That’s about one in 16 families that year. The chances that two such families would live together for three years -- sharing income and filing separate tax returns -- are much lower.

Tax payments

Fredericks, in his radio statement, also said that all reclassified immigrants can be eligible for the maximum credit " without paying a dime in." This claim runs into trouble because those who will qualify for the credit would have been paying payroll taxes this year and in any past years they would seek to recoup.

Although some illegal immigrants work in the underground economy and do not report their income to the government, others do. The IRS issues those workers an Individual Taxpayer Identification Number (ITIN) and accepts their filings without reporting them to immigration authorities. That’s designed to encourage them to pay taxes.

A 2011 study by the Department of Treasury estimated 3 million ITIN holders filed federal taxes that year, with 2.3 million getting refunds and 700,000 paying arrears.

Stephen Goss, Social Security’s chief actuary, told the Associated Press in February that illegal immigrants have paid $100 billion in Social Security payroll taxes during the last ten years, even though few will be able to collect benefits when they retire.

A final note: As we said earlier, a coalition of 26 states -- not including Virginia -- has filed a suit challenging Obama’s action. It contends that Obama exceeded his presidential authority by granting temporary legal status to immigrants without getting approval from Congress. A U.S. District Court judge in Texas has blocked the immigration program until there is a trial on the suit. The White House has appealed the judge’s action.

Our ruling

Fredericks says, "Now we find out that every one of these illegals who came into this country illegally, that worked illegally, broke the law a number of times, now they can be eligible for up to $36,000 to $38,000 in earned income tax credits without paying a dime in."

He’s wrong for a number of reasons:

  • The maximum credits any family could receive is $24,320 for the four most recent tax years.

  • "Everyone of these illegals" is not eligible for the maximum credit. To qualify, a family must have at least three children and a taxable income of no more than about $23,000 a year. Only 6.4 percent of families that applied for the credit in 2012  fell into that category. To receive back payments, immigrants would have to produce earning documents from past years.

  • You can’t get the credit "without paying a dime in." You’d have to pay payroll taxes.

Fredericks offers a scenario in which two families living together with three children apiece could claim $36,000 in combined credits if they file taxes separately. But this hypothetical situation lies on the margins and doesn’t buttress Fredericks’ claim that all reclassified immigrants can be eligible for up to the maximum credit.

We rate Fredericks’ statement False.

Our Sources

John Fredericks Show, Interview with U.S. Rep. Robert Hurt, Feb. 28, 2015, 5:00 on tape. (quote)

John Fredericks Show, Interview with U.S. Rep. Morgan Griffith, Feb. 28, 2015, 12:20 on tape.

Email from John Fredericks, March 4, 2015.

The Washington Post Fact Checker, "Lawmaker Bungles Immigration Facts at Town Hall Meeting," Feb. 20.

Associated Press, "Republicans Say Obama Giving Immigrants `Amnesty Bonuses,’ Feb. 14, 2015., "Illegal Immigrants Get Tax Refunds Without Paying Taxes," Feb. 13, 2015., "Amnesty Bonuses?" Feb. 20, 2015.

Internal Revenue Service, "Income Limits and Range of EITC," Nov. 24, 2014.

Internal Revenue Service, "Statistics for Tax Returns with EITC," Jan. 29, 2015.

The Washington Times, "IRS Defends Paying Refunds to Illegals Who Never Paid Taxes," March 2, 2015.

YouTube, "Rep. Mulvaney questions IRS Commissioner John Koskinen," Feb. 11, 2015.

Internal Revenue Service, "EITC Income Limits, Maximum Credit Amounts and Tax Law Updates,"  2012, 2013, 2014, 2015.

Bloomberg News, "Obama Sets Monday Deadline for Appealing Immigration Order," March 4, 2015.

Interviews with John Wancheck, coordinator of the Earned Income Tax Credit Campaign for the Center on Budget and Policy Priorities, March 5-6, 2015.

Department of Treasury, "Final Audit Report," Appendix IV, July 7, 2011.

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