Asset Development and Economic Empowerment for People with Disabilities

An Orientation and Link to Resources

Strategic Service Delivery Component

Disability Employment Initiative

The following chart highlights the core elements associated with this service delivery component and includes the names of the states that will be implementing this approach:

New York

Alaska Kansas Virginia Maine Illinois

Strategies

Earned Income Tax CreditFinancial Literacy Education

Use of Social Security Work IncentivesIndividual Development Accounts

Home Ownership AssistanceEntrepreneurship

Affordable Financial ServicesFamily Self Sufficiency Program

Access the following link to learn what each DEI project proposed in their statement of work around this component: http://dei-ideas.org/chapter2-1/page7a_ads.cfm

Poverty Whether it is access to:

A quality education Effective transition from school to work Affordable (accessible) transportation, housing, (technology

or long-term supports)

Enduring poverty and lack of economic empowerment will: Diminish choices and quality of life within communities, and Singularly diminish freedom, opportunity, and self-

determination

What do we know about people with disability and poverty?

Nationally, in 2008, 25.3% of people with disabilities have an income that falls below the federal poverty level compared to 9.6% of people without a disability.

Erickson, W. Lee, C., & von Schrader, S. (2010). 2008 Disability Status Report: New York. Ithaca, NY: Cornell University Rehabilitation Research and Training Center on Disability Demographics and Statistics. www.disabilitystatistics.org

What do we know about people with disabilities and poverty? (Continued)

Lack of money is a serious problem among 68% of people with disabilities: 39% of people with disabilities say that the lack of financial

resources is the most serious problem they face. (NOD/Harris Survey 2000 and 2004)

Public assistance represents 59% of the total income of people with significant disabilities and only 8% of the total income of people who have no disability. (Harris Survey 2002)

Less than 10% of people with disabilities own their own homes compared with 70% of Americans with no disabilities.

Asset Poverty Varies Significantly

33% of all American households have no assets or are in debt.

54% of Hispanic households have a similar status.

60% of African American households have no net assets.

80% of persons with disabilities have no net assets.

Disability and Poverty

People with disabilities are more likely to be unemployed and to live in poverty than any other single demographic group in the United States today.

Public benefit programs for people with disabilities, especially Supplemental Security Income (SSI), are not aimed at increasing assets and independence for people with disabilities.

• More likely to be unemployed

• Less likely to have graduated high school

• Living in poverty

• Dependent on public benefits

Composite PictureWorking-age Adult with a Disability

Economic Empowerment:What is it?

Why is it important

Economic Empowerment: What is it? Economic Empowerment is a series of strategies that has

the potential to:help people with disabilities improve their economic

stability, decrease stress and financial crisis in an individual’s lifeexpand opportunities for community participation, and positively impact an individual’s quality of life

experience.

Strategies

11

Post-secondary education

Self-employment

Micro-Enterprise

Home Ownership

Employment

Use of work incentives

Use of tax incentives

Earned Income Tax Credit

Family Self-Sufficiency Programs

Ways to Work

Individual Development Accounts

Assistive Technology Loan Funds

Student Loans

Financial Literacy

Budgeting

Credit Repair Medicaid

Buy-In

Economic Empowerment: Why is it important? The presence of a disability and the need to maintain a public

benefit should not require one to forfeit their economic stability and live in poverty. Without knowledge, guidance and encouragement, individuals are not empowered to earn, learn, save and build.

To a person with a disability, saving money and developing assets will produce choices that directly impact their quality of life, especially regarding:o mental and physical healtho positive self-concept and level of community participationo expectations and status with other community stakeholders

It’s the law…..Americans With Disabilities Act of 1990 The Nation’s proper goals regarding individuals with disabilities are

to assure equality of opportunity, full participation, independent living, and economic self-sufficiency for such individuals;

42 U.S.C. § 1201(a)(8) (2005)

the continuing existence of unfair and unnecessary discrimination and prejudice denies people with disabilities the opportunity to compete on an equal basis and to pursue those opportunities for which our free society is justifiably famous, and costs the United States billions of dollars in unnecessary expenses resulting from dependency and non-productivity.

42 U.S.C. § 1201(a)(9) (2005)

13

So what’s the barrier?

• Public attitudes

• Low expectations of and within the disability community, and

• Current partnerships don’t support savings and building a financial future.

• Regulations discourage saving for the future; retirement, emergencies, etc.

Change Public Attitudes – Three Myths

People with disabilities are unable to work. Work produces income which is the first step towards saving and building assets.

People with disabilities have all their needs met by their special programs.People with disabilities may need to maintain one or benefit due to their disability but ultimately want freedom and independence.

People with disabilities can’t be expected to save and build assets.People with disabilities want a better economic future. They are starting businesses and becoming homeowners.

Create New Expectations

Assume all people want to better their lives. Engage people with disabilities in the conversation. Provide simplified opportunities for individuals to

improve their financial stability. Acknowledge the limited financial literacy of all

Americans including those with disabilities. Just as you assume competence, assume the desire to

live beyond poverty. Coordinate multiple systems and resources to support

economic empowerment

Develop New Partnerships

Groups working on Financial Stability include:1. United Way2. Financial Institutions (Banks and Credit Unions)3. Individual Development Account Providers4. Prosperity Campaigns (Tax Coalitions)5. Microenterprise and Small Business Supports6. Junior Achievement7. Financial Education Trainers8. Credit Counselors9. Local Governments10. State Comptroller’s Office11. Public Hearing Agencies–Family Self-Sufficiency Programs12. Benefits Planners – WIPA grantees

Asset Development and Disability Employment Initiative

Create linkages to Partners and Resources to advance employment, saving, and asset building

Improve understanding of the benefits of economic empowerment strategies to change thinking and behavior of youth and adults with disabilities

Identify and connect with short and long term savings programs and improve access and coordination of resources to benefit people with disabilities

Focus on Economic Empowerment

19

Empower persons with disabilities with new knowledge, choices, and supports

Pilot, demonstrate, document, and disseminate success at an individual and systems level

Increase awareness and understanding of ways social insurance, employment, and asset development programs work together rather than in conflict

Focus on Economic Empowerment cont.

20

Establish community-wide savings and asset building work groups

Build a bridge across disability and nondisability, public and private, for profit and not for profit entities

Orientation to Essential Strategies

Earned Income Tax Credit

Individual Development Accounts

Financial Education

Benefits Planning and Use of Work Incentives

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a credit for people who earn low-to-moderate incomes. EITC can reduce your taxes, and can mean a refund. In simple terms, working families and individuals may keep more of what they work for.

EITC – Earned Income Tax Credit

The EITC is a refundable credit. What this means is that if you qualify based on your income, even when you have no tax liability, you will receive a tax refund.

You must file your taxes to receive this refund, even if you do not have any tax liability.

If you are filing for the EITC for the first time, you may file to claim the credit for a three-year period.

24

Earned Income and adjusted gross income (AGI) must be less than:• $43,352 ($48,362 married filing jointly) with three or more qualifying

children• $40,363 ($45,373 married filing jointly) with two qualifying children• $35,535 ($40,545 married filing jointly) with one qualifying child• $13,460 ($18,470 married filing jointly) with no qualifying children

Tax Year 2010 maximum credit:• $5,666 with three or more qualifying children• $5,036 with two qualifying children• $3,050 with one qualifying child• $457 with no qualifying children

Investment income must be $3,100 or less for the year.*For more information on whether a child qualifies you for EITC, see IRS Publication 596, Chapter 2.

Preview of 2010 Tax Year EITC

EITC Requirements

Must have a valid Social Security Number You must have earned income from employment or from self-

employment. Your filing status cannot be married, filing separately. You must be a U.S. citizen or resident alien all year, or a nonresident

alien married to a U.S. citizen or resident alien and filing a joint return.

You cannot be a qualifying child of another person.

If you do not have a qualifying child, you must: be age 25 but under 65 at the end of the year, live in the United States for more than half the year, and not qualify as a dependent of another person

Cannot file Form 2555 or 2555-EZ (related to foreign earn income)

Benefit of EITC

The money received as a result of the EITC can be used to build assets…By saving the money, or part of the money received as a result of the EITC, one can begin to build assets. For example, the money received as a result of the EITC

could be used to establish a relationship with a financial institution (e.g. Opening a Savings or Checking Account).

Persons now have the ability to split the refund they receive in up to three different accounts making saving the money easier than ever.

SSI and EITC

27

Income ‘Exclude from income any EITC payments received either as an

advance or as a refund, regardless of the tax year involved.’

Resource Any unspent Federal tax refund or payment made by an

employer related to an EITC that is received on or after 3/2/04 is excluded from resources for the 9 calendar months following the month the refund or payment is received. Income - https://secure.ssa.gov/poms.nsf/lnx/0500820570 Resource - https://secure.ssa.gov/poms.nsf/lnx/0501130675

VITA – Volunteer Income Tax Assistance

The IRS is working with diverse community partners to establish Volunteer Income Tax Assistance (VITA) Sites to help prepare tax returns and help people claim the EITC.

By offering these services free of charge it provides the opportunity for persons to file their taxes and take advantage of the Earned Income Tax Credit at no cost to them.

In 2009, VITA saved taxpayers with disabilities $36.2 million*.

*Includes 89 REI Tour cities only.

VITA – Volunteer Income Tax Assistance

File For Free!!! The VITA Program offers free tax help to low- to moderate-

income (generally, $49,000 and below) people who cannot prepare their own tax returns. Certified volunteers sponsored by various organizations receive training to help prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. Most locations also offer free electronic filing.

To locate the nearest VITA site, call 800-829-1040.

Real Economic Impact Tour

The National Disability Institute in partnership with the IRS has expanded outreach to people with disabilities in 100 cities through community tax coalitions

ACTIVITIES•Create disability workgroups within free tax coalitions•Design free tax services and products that are accessible across the disability continuum•Create volunteer tax modules that address serving taxpayers with disabilities•Hold asset summits to introduce disability community to financial community•Provide benefits education about receipt of public benefits and tax credits

31

PURPOSE Build disability inclusive free tax

assistance through trusted networks

OUTCOMES Growing awareness that disability is

a key component of diversity

New income poverty research linked to disability

32

REI Tour Outcomes

33

YEAR CITIES PARTNERSRETURNS

PREPARED

TAX REFUNDS RECEIVED

$$ SAVED

2005 11 ----- 7,600 $6.8 mil $1.5 mil

2006 30 200 17,223 $15.3 mil $3.4 mil

2007 54 355 36,275 $32.6 mil $7.2 mil

2008 62 555 90,653 $81.0 mil $18.1 mil

2009 84 634 181,152 $176.6 mil $36.2 mil

2010 100 710 360,499 $351.5 mil $72.0 mil

693,402 $663.8 mil $138.4 mil

Financial Education for Individuals, Families, and Employers

Need a framework for building financial relationships with non-traditional partners in the community.

Professionals in financial services need education about the specific needs of individuals with disabilities on public benefits who are working.

Employers of individuals with disabilities need information and guidance in assisting workers with various options for employee benefits

Inclusive not Unique Curriculum

Designing separate curriculum is not necessary.

So what is necessary?Enduring individuals with disabilities receive the

same educational benefit as those served without disabilities.

Creating an inclusive environment that is empowering, disability sensitive, and solution oriented.

Indicators of an Inclusive Environment

Spirit of InclusionBarrier Free EnvironmentAccessible Communications OptionsAbsence of Program BarriersUtilization of Community Resources

NDI’s Accessible Financial Literacy checklist:

www.realeconomicimpact.org/data/files/other%20documents/Accessible_FL_Checklist.doc

Individual Development Accounts

Individual Development Accounts began to receive federal funding in the late 1990’s as an asset building strategy for low income, low wealth families.

Federal funding for the accounts were provided by two sources, Temporary Aid to Needy Families (TANF) and the Assets for Independence Act (AFIA).

Individual Development Accounts Individual Development Accounts (IDAs) are matched savings

accounts that allow individuals with limited income and limited wealth to save money and to build assets.

The IDA Provider partners with Financial institutions, foundations, churches, private donors, and state and local governments to fund the matches to the personal savings of IDA holders (usually at a rate ranging from $1 to $8 for each dollar saved).

For example, an IDA program with a 2:1 match would provide $2 for every $1 dollar saved in the IDA, $1000 saved in the IDA would receive a $2000 match.

Individual Development Accounts

An IDA can be used to purchase 1. a home2. higher education and training3. business capitol

o Federally funded IDA programs require that participants enroll in financial education classes. Most projects require at least 12.5 hours of training before a proposed asset can be purchased.

o The IDA provider may also provide connections to credit counseling, VITA services, EITC and public benefit enrollment. These services provide an individual the opportunity to increase their ability to earn, budget and save towards their goal.

IDA Program Eligibility

You must have earned income and meet the program’s income guidelines.

For AFI IDAs, the individual must:o be eligible for Temporary Assistance for Needy Families, or receive

TANF, at the time of application, OR

o have an adjusted gross household income equal to or less than 200 percent of the Federal poverty level and have a household net worth less than $10,000 (excluding the value of a primary dwelling unit and one motor vehicle),OR

o be eligible for the federal Earned Income Tax Credit.

IDA and Public Benefits

41

Assets accrued in an IDA established using TANF or AFIA money can not, under Federal regulations, negatively impact an individual’s eligibility for federal programs. The individual’s contributions, matching contributions, and interest can not be considered as an asset when determining eligibility or benefit levels for federal benefit programs like Social Security, Medicaid and Food Stamps.

Assets for Independence Act, Section 415, codified at 42 U.S.C. 604 note and Social Security Act, Section 404(h)(4), codified at 42 U.S.C. 604(h)

SSI and qualified IDAs

42

SSI does not count the individual’s contributions, matching contributions, and interest as a resource.

SSI also excludes the individuals contribution from their countable earned income.

http://www.ssa.gov/ssi/spotlights/spot-individual-development.htm

Individual Development Accounts

To learn more about AFI IDAs and locate an IDA Provider in your state please visit the Assets for Independence IDA Online Directory, http://www.acf.hhs.gov/programs/ocs/afi/states.html.

cfed (Corporation for Enterprise Development) provides a directory of IDA Providers (which may or may not receive TANF or AFI funding), http://cfed.org/programs/idas/directory_search/

Assets for Independence Resources to expand services to individuals with disabilities, www.idaresources.org

Benefits Planners and Work Incentives

All states have benefits planners funded by the Social Security Administration

There are a dozen work incentives available to help individuals with disabilities receiving social security benefits

The benefits planners funded by SSA in your state are an excellent resource to help individuals increase income and savings

To identify the Work Incentive Planning and Assistance grantees in your state, visit http://ssa.gov/work/wipafactsheet.html

Learn More

WID Equity Newsletter - http://www.wid.org/programs/access-to-assets/equity

NDI – http://www.realeconomicimpact.org/Resources/Links.aspx

USDOL Creating a Road Map - www.dol.gov/odep/documents/197953_DeptLabor.pdf

AFI Assets for Independence Resource Center - http://idaresources.org/page?pageid=a047000000ApiTL

Clearinghouse Review article on Asset Building- http://www.povertylaw.org/clearinghouse-review/issues/2010/2010-may-june/harris