How do we get our deposit back from a contractor that never did the work?

Sadly, this is not uncommon. If the contractor won't ante up, then you'll need to sue him and hope for the best. If contractors are licensed in Illinois, you can threaten and/or lodge a complaint and that might prompt a refund, but otherwise you're left with threatening or bringing a lawsuit.  Even with a win, you'll still need to collect, and as I've said many times on this site, "You can't get blood from a turnip." Thus, if the contractor doesn't pay the judgment, then you'll have to track down property to attach it to in order to collect. That means real estate, motor vehicles, bank accounts and wages. In light of all that's happened in the real estate markets, many contractors are turnips, so you might still be left holding the bag. Therefore, I strongly suggest you consider if the amount you're chasing is worth it. Best of luck in getting the work done or your cash back.