The U.S. Department of Health and Human Services, Administration for Children and Families is committed to providing information on the Earned Income Tax Credit (EITC), financial literacy, and asset building.
RESEARCH AND EVALUATIONS
This section presents research and reports on the Earned Income Tax Credit (EITC) and asset building for low-income families.
Urban Institute held a webinar discussing families that are asset poor – lack sufficient resources to live at the poverty line for three months – and the importance of asset poverty. A third of U.S. families are liquid asset poor, and these families are disproportionately minority, young, and low-income. A lack of assets threatens families' ability to weather adverse events. After experiencing an involuntary job loss, asset poor families are nearly three times more likely to experience hardship than non-asset poor families. These large differences exist across the income spectrum--for low-, middle-, and high-income families.
For more information, please see: http://www.urban.org/UploadedPDF/412911-Asset-Poverty-and-the-Importance-of-Emergency-Savings.pdf
The Social Science Research Network released a paper discussing financial literacy, education, and downstream financial behaviors. A meta-analysis of the relationship of financial literacy and of financial education to financial behaviors was conducted in order to understand the increasing complexity of the financial decisions of individuals over the last generation. The paper discusses the importance of financial education and literacy, as well as suggestions to implement financial education programs. Financial literacy and education are extremely critical to improving the economic self-sufficiency of workers, and therefore, should be reinforced throughout an individual's life.
For more information, please see: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2333898
The Corporation for Enterprise Development (CFED) released a guide which provides examples of workforce programs that have integrated one or more financial capability and asset-building strategies into their work. For the most part, these examples rely on partnerships to deliver services; however, some of the examples include referral networks or building internal capacity to deliver services directly.
For more information, please see: http://cfed.org/assets/pdfs/Integrating_Financial_Security_and_Asset-Building_Strategies_into_Workforce_Development_Program.pdf
The Assets for Independence (AFI) Resource Center's Web site devotes a section to innovative projects and strategic partnerships for delivering AFI projects and asset building services. Areas of innovation include developing IDA programs and services for youth; working with financial partners such as credit unions and housing agencies; and integrating IDA services into other programs for low-income people, such as Temporary Assistance to Needy Families and job training
For more information, please see: http://idaresources.org/page?pageid=a047000000ApiTQ
The Office of Financial Empowerment within the Consumer Financial Protection Bureau (CFPB) recently released a white paper titled "Financial Empowerment Training for Social Service Programs: A Scan of Community-Based Initiatives." The paper presents the results of a field scan conducted by the CFPB to learn more about the tools and information social service providers across the country need to help their clients increase their financial capabilities. This information was fundamental to the design and development of "Your Money, Your Goals," the financial empowerment toolkit developed by CFPB and scheduled to be released in 2014.
For more information, please see: http://files.consumerfinance.gov/f/201309_cfpb_report_training-for-social-services.pdf
The AFI Resource Center now has two new Tools for Success available on the Managing Your AFI Grant page to help you successfully manage your AFI grant. The Program Design Checklist is a concise guide for new and existing AFI grantees. This checklist can be used to make sure your AFI Individual Development Account (IDA) program is running smoothly, help you draw down your AFI grant monies, and assist IDA program participants in completing their asset purchases. The IDA Program Brochure is a template that can be used to promote your IDA program. You can easily modify the areas highlighted in the brochure to tailor it to your specific program.
For more information on upcoming grant application cycles for 2013 and how to apply, please see: http://idaresources.org/page?pageid=a047000000DegJC
The Office of Community Services (OCS) is now accepting applications for funding new Assets for Independence (AFI) projects. All applications must be submitted electronically through Grants.gov. Applicants may submit materials at any time throughout the year. OCS will review and fund new grants in three cycles in calendar year 2013. The application receipt dates are: Spring Cycle -- March 25, 2013, and Summer Cycle -- May 24, 2013.
For more information, please see: http://www.acf.hhs.gov/programs/ocs/resource/for-prospective-grantees
This recently released research study from the Urban Institute identifies promising approaches that could be implemented within the Annie E. Casey Foundation's Center for Economic Opportunity program to assist the most vulnerable families, of which families escaping domestic violence are included. The research indicates that programs can improve a vulnerable family's employability and savings; however, the most successful interventions are "high touch," longer in length than standard programs, and therefore, more expensive. Also highlighted is the importance of creating partnerships with healthcare providers, as this is often a significant barrier to stability for these families that remains unaddressed.
The Finance Project released a brief aimed to help policymakers, community leaders, private investors, and other stakeholders understand what is known about the opportunities and conditions for success in designing and implementing incentive-based financing strategies to take innovative evidence-based social solutions to scale. It describes the design and implementation of three broad types of innovative financing strategies that make funding contingent on specific benchmarks for success. The brief offers considerations for stakeholders to address when determining how these strategies could work for a community or State seeking to link funding to achievable outcomes.
For more information, please see: http://www.financeproject.org/publications/SharingRisksReturns.pdf
In 2006, New York instituted a noncustodial parent earned income tax credit (NCP EITC) to encourage low-income noncustodial parents to work and pay child support. The Urban Institute published a research report examining the NCP EITC's impacts through 2009. Study findings include trends in eligibility, receipt and average benefit, profiles of noncustodial parents, and regression results.
For more information, please see: http://www.urban.org/UploadedPDF/412610-The-New-York-Noncustodial-Parent-EITC.pdf
The Federal government has recently placed a greater emphasis on connecting survivors with asset building programs as a way to build financial independence for the population. With this goal in mind, this toolkit was designed as a step by step guide for both AFI programs and domestic violence service providers interested in creating partnerships. It provides information targeted specifically at each partners, as well as additional resources such as draft MOUs and letters of commitments.
For more information, please see: http://idaresources.acf.hhs.gov/servlet/servlet.FileDownload?file=01570000001bh8JAAQ
The New America Foundation authored this paper, which provides information on the “unbanked” population and how to help increase the use of bank accounts for low-income households. Recent data from the Federal Deposit Insurance Corporation (FDIC) showed that nine million Americans do not have a checking or savings account and spend hundreds of dollars making financial transactions. Researchers conducted a qualitative study of the financial attitudes and behaviors of individuals currently receiving TANF, focusing on how they manage their money. The author concludes with findings that could impact policy and practice and helping to support these individuals in becoming banked.
For more information, please see: http://assets.newamerica.net/sites/newamerica.net/files/policydocs/RourkeMarch2012.pdf
The Office of Community Services (OCS), within the U.S. Department of Health and Human Services, administers the Assets for Independence (AFI) Program. AFI funds community-based, faith-based, and other organizations, such as State, local and tribal government agencies that assist low-income people to become economically self-sufficient. The Assets for Independence Resource Center takes an asset-based approach to self-sufficiency and offers users many resources specific to program and agency needs, as well as resources specific to certain populations. Visit the Resource Center to learn more about IDAs, read success stories, locate a project near you, or apply for an AFI grant.
For more information, please see: http://idaresources.org/Home
Families play a large role in determining how we spend, save, and invest for the future. The Building Assets*Building Stronger Families financial education guide provides 50 financial literacy activities designed to help families talk about Money Values and Attitudes, Family Dreams and Goals, and Family Budgeting. These activities can be used alone in or in combination with another financial education curriculum, such as the FDIC’s MoneySmart.
For more information, please see: http://idaresources.org/page?pageid=a047000000ApiTG
Published by the Organisation for Economic Cooperation and Development (OECD) , this document is a literature review of existing gender differences that pertain to financial literacy. The literature reveals that women are often less financially literate than their male counterparts. Since a high proportion of TANF participants are women, this review sheds light on some of the potential policy and programmatic responses to this gender gap.
For more information, please see: http://www.oecd-ilibrary.org/finance-and-investment/empowering-women-through-financial-awareness-and-education_5k9d5v6kh56g-en
MyMoney.gov is the U.S. government's web site dedicated to teaching all Americans the basics about financial education. Whether buying a home, balancing a checkbook, or investing in a 401(k), the resources on MyMoney.gov can help individuals maximize the benefits of their financial decisions. Throughout the site, users will find important information from 20 Federal agencies and Bureaus designed to help individuals make smart financial choices. MyMoney.gov organizes financial education help from over 20 different Federal web sites in one place. Content is organized by where people are in life ("Life Events"), who they are ("My Resources"), and by specific hands-on tools ("Tools"). Popular Topics are also highlighted. This site provides summaries of resources available at other official government sites and allows users to open those pages in a new window ("Learn More"). MyMoney.gov also offers an Outreach Tool Kit with sample materials for organizations to use to help their participants learn about free financial education available. The Outreach Tool Kit includes a sample press release, e-flyer, bookmark, Web buttons and banners, and ideas for other outreach.
From the Corporation for Enterprise Development (CFED), the Scorecard provides a comprehensive picture of wealth, poverty and the financial security of families in the United States across all 50 states and District of Columbia. CFED offers state-by-state performance and policy measures across five issue areas: Financial Assets and Income, Businesses and Jobs, Housing and Homeownership, Health Care and Education. Across the five issue areas, CFED gives a detailed assessment of the strength of each State’s policies, recommendations to strengthen policies, and links to Resource Guides.
For more information, please see: http://cfed.org/scorecard/
In 2009, the United States ranked fourteenth in college graduation rates among industrialized countries, and this research highlights ways to improve college attendance and graduation rates at 4-year colleges. This working paper, through the Center for Social Development at Washington University in St. Louis, provides a review of 38 studies on the relationship between assets and children’s education attainment. Then, authors discuss Child Development Accounts (CDAs) policies, which have been proposed as an asset approach for helping to finance college.
For more information, please see: http://csd.wustl.edu/Publications/Documents/WP11-08.pdf
From the White House, this report highlights the work of the Obama Administration to help lift people out of poverty and support families during the economic recession. Specifically, it is estimated that the American Recovery and Reinvestment Act of 2009 helped keep 6 million people out of poverty. Additionally, the inception of the Making Work Pay Tax Credit and expansion of the Earned Income Tax Credit and Child Tax Credit helped keep 3.2 million people out of poverty. Over the President’s first term, these efforts helped offer $3,600 in tax relief to a typical family earning around $30,000 a year.
For more information, please see: http://www.whitehouse.gov/sites/default/files/revised_creating_pathways_to_opportunity_report_10_14_11.pdf
This report was authored by the Urban Institute and examines whether the poor can and do save and their ability to build assets. Using data from household surveys and asset building programs, authors are able to conclude that poverty does not have to be incompatible with asset accumulation. Authors conclude with the implications for such findings and suggestions for future research.
For more information, please see: http://www.urban.org/UploadedPDF/412391-Poverty-Incompatible-with-Asset-Accumulation.pdf
From the Urban Institute, this guide provides an overview of the child-related provisions as part of individual income taxes. Individual income taxes have many benefits for families with children, which include credits targeted towards low-income families and deductions for higher income families. With motives to help support families, but also to incentivize employment and education, families often receive substantial benefits.
For more information, please see: http://www.urban.org/UploadedPDF/412329-Child-Tax-Benefits.pdf
Using microdata from the American Dream Demonstration, this study examines factors associated with savings and savings goal achievement (indicated by a matched withdrawal) among participants of individual development account (IDA) programs. Results show that hours of participation in financial education programs, higher matched caps, prior use of a savings account, and greater educational attainment are each associated with a greater likelihood of savings and savings goal achievement. IDA programs need to maximize available resources, particularly financial education, to assist participants in achieving savings goals.
For more information, please see: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1996707
Earned Income Tax Credit (EITC)
The U.S. Department of Health and Human Services, Administration for Children and Families (ACF), Office of Family Assistance (OFA), Regions I, II and III hosted representatives from 14 States in the Northeast region at the 2013 Tri-Regional Technical Assistance Meeting entitled "Developing an Exit Strategy for Leaving TANF on the Pathway to Family Stability." This meeting was held on September 17-19, 2013 in Philadelphia, Pennsylvania. Temporary Assistance for Needy Families (TANF) stakeholders were brought together to engage with peers on innovative strategies and collaborations to promote economic and social well-being for individuals, families and communities. State and territory representatives shared strategies they are utilizing to overcome barriers to self-sufficiency. In addition to peer networking and dialogue with ACF and OFA leadership, experts from the field presented on topics ranging from the intersection of learning disabilities and TANF families, to maximizing collaborations to improve TANF program outcomes.
Speaker Biographies [PDF - 286 KB]
Arkansas – Helping Low-Income Parents [PDF - 130 KB]
Agenda [PDF - 306 KB]
Current ACF-196 Categories [PDF - 79 KB]
Copy of 196r forms [PDF - 295 KB]
Region I, II, III States FY 2012 Expenditures [PDF - 349 KB]
Revised ACF 196r Instructions [PDF - 503 KB]
TANF Information Memorandum [PDF - 107 KB]
ASSET Initiative Partnership (AIP) - Overview [PDF - 287 KB]
Strengthening Asset-Building Partnerships & Improving Asset-Building Outcomes [PDF - 727 KB]
Promising Strategy: Idaho Department of Health and Welfare and the Charitable !ssistance to Community's Homeless, Inc. (C!TCH Program) [PDF - 620 KB]
Making Effective Use of TANF to End Family Homelessness [PDF - 573 KB]
Housing Stability [PDF - 464 KB]
Mercer County Case Study [PDF - 575 KB]
Utah Road Home Case Study [PDF - 495 KB]
Arkansas Career Pathways Initiative Case Study [PDF - 729 KB]
IFA Press Release [PDF - 219 KB]
Arkansas Department of Higher Education - Arkansas Career Pathways Initiative [PDF - 1,915 KB]
APHSA - The National Workgroup on Integration [PDF - 237 KB]
Removing Barriers, Building Savings [PDF - 1,963 KB]
Domestic Violence PPT [PDF - 276 KB]
DC TANF Redesign [PDF - 1,306 KB]
Year Up [PDF - 1,444 KB]
KISRA [PDF - 3,743 KB]
The Center on Budget and Policy Priorities released a report discussing the benefits of strengthening the Earned Income Tax Credit (EITC) for childless workers in order to promote work and reduce poverty. The report addresses how strengthening the credit could bring about social and economic benefits through an increase in labor participation, marriage rates, and a decrease in incarceration rates. In addition to this, examples on how to strengthen the EITC for childless workers are also discussed.
For more information, please see: http://www.cbpp.org/files/7-15-13tax.pdf
The Center on Budget and Policy Priorities released an article suggesting that EITC's benefits extend well beyond the limited time during which a family typically claims the credit. The article indicates that children of EITC recipients do better in school, are more likely to attend college, and earn more as adults. The Child Tax Credit (CTC) is discussed, which is a related credit that is designed to help offset the cost of child-rearing, and also plays a major role in helping low-income working families.
For more information, please see: http://www.cbpp.org/files/6-26-12tax.pdf
MDRC has released a report on the preliminary implementation findings from the SaveUSA program evaluation. SaveUSA is a pilot program in New York City, Newark, San Antonio, and Tulsa that offers a matched savings account to low-income tax filers by building on the opportunity presented by tax-time refunds, especially the Earned Income Tax Credit (EITC). This policy brief also includes recruitment and account enrollment results.
For more information, please see: http://www.mdrc.org/sites/default/files/SaveUSA_brief14.pdf
The Center for Poverty Research faculty at the University of California Davis released a new study that examines the 1993 EITC expansion to measure the effect extra income had on rates of low birth weight. The study found that while the EITC is not a health program, it does have a clear impact on newborns.
For more information, please see: http://poverty.ucdavis.edu/sites/main/files/file-attachments/policy_brief_hoyes_eitc_0.pdf
As one of the largest federal anti-poverty programs, the Earned Income Tax Credit is a powerful asset-building tool for people with earned income because it can reduce their taxes and result in a refund.
For more information, please see: http://www.acf.hhs.gov/blog/2013/01/earned-income-tax-credit-awareness-day
The Welfare Peer TA Network hosted a Webinar on engaging low-income families in tax filing assistance. The Webinar, "Engaging Temporary Assistance for Needy Families (TANF) Participants in Tax Filing Assistance" highlighted the Internal Revenue Service's (IRS) two new free tax preparation models and introduced techniques on how to improve outreach and engagement to TANF recipients and other low-income individuals. Presenters included representatives from the Nehemiah Gateway Community Development Corporation, the Delaware Division of Social Services, and the IRS.
Engaging Temporary Assistance for Needy Families (TANF) Participants in Tax Filing Assistance Webinar Slides
[PDF - 1,526 KB]
Engaging Temporary Assistance for Needy Families (TANF) Participants in Tax Filing Assistance Webinar Recording [MP3 - 35,885 KB]
Engaging Temporary Assistance for Needy Families (TANF) Participants in Tax Filing Assistance Webinar Transcript [PDF - 208 KB]
The Institute of Research on Poverty (IRP) hosted Mr. Damon Jones, an economist at the University of Chicago's Harris School of Public Policy, to talk about how the Earned Income Tax Credit (EITC) and other refundable tax credits can combine to create a large once-a-year payment for low-income tax filers, and how that payment structure affects the ways that those funds are used.
The Earned Income Tax Credit (EITC) is one of the single most important social insurance programs in place in the U.S. The purpose of this paper is to evaluate the insurance and incentive effects of the EITC on a central class of recipients: single mothers. To the authors of the paper, it is to their knowledge, the first attempt to analyze the EITC in a life-cycle decision problem with risky wages, risky family-composition, and limited self-insurance. The results indicate that the EITC provides substantial insurance to young single mothers and does not significantly distort labor supply decisions.
For more information, please see: http://www.economicdynamics.org/meetpapers/2010/paper_1103.pdf
The Office of Family Assistance hosted a Webinar, "Building an EITC Coalition," on July 12, 2012. This Webinar provided background on how to create an EITC coalition at the local and State levels, discussed methods for developing community support and partnerships when building an EITC coalition, encouraged collaborations between TANF agencies and EITC coalitions to better reach TANF participants, and provided resources for gaining additional information about the impact of EITC campaigns and coalitions.
Building an EITC Coalition Slides
[PDF - 2,260 KB]
Building an EITC Coalition Transcript [PDF - 276 KB]
Building an EITC Coalition (Audio with PowerPoint) [MP4 - 117,430 KB]
This report is from the Center on Budget and Policy Priorities, which provides an overview of outcomes related to Earned Income Tax Credit (EITC) use. In 2009, 27 million adults received the EITC, and studies show that the EITC encourages work, can reduce poverty, and improves child outcomes in school achievement. In 2009, the EITC lifted around nine million people above the poverty line.
For more information, please see: http://www.cbpp.org/files/6-26-12tax.pdf
The EITC Platform website is a resource for organizations that provide low-income tax preparation services. This website provides training, tools, and resources related Earned Income Tax Credit (EITC) and free tax preparation programs.
For more information, please see: http://www.eitcplatform.org/
Using a panel of 4,500 children matched to their mothers from National Longitudinal Survey of Youth datasets, authors analyze the impact of a family’s income on child achievement to understand possible causal effects an increase in family income, such as through the Earned Income Tax Credit (EITC). Specifically, a $1,000 increase in income is shown to equate to child gains in reading and math test scores, and the increase in scores is larger for children in more disadvantaged families.
For more information, please see: http://dss.ucsd.edu/~gdahl/papers/children-and-EITC.pdf
The Brookings Institution authored this brief on the Earned Income Tax Credit (EITC) since the inception of the “EITC Movement” ten years ago. Authors review the past accomplishments of the EITC Movement and discuss how the Movement will continue to support working families in the future, building on lessons learned. Since the movement, the VITA program has grown considerably, and the Movement has facilitated institutional changes to highlight the use of the EITC and other tax credits to help families become economically self-sufficient.
For more information, please see: http://www.brookings.edu/~/media/Files/rc/papers/2011/0418_eitc_holt/0418_eitc_holt.pdf
The Employment and Training Administration is encouraging One-Stop Career Center staff and community partners to notify customers who need help in preparing their taxes to use Free File, a service that offers free federal and state tax preparation and e-file options for all taxpayers. Free File is made possible through a public-private partnership between the IRS and commercial tax software companies. If an individual's adjusted gross income was $58,000 or less in 2010, they may use brand-name software (e.g. Turbo-Tax) to complete their taxes for free. If an individual's income was more than $58,000, they may use the Free File Fillable Forms. ETA has issued a Training and Employment Notice that provides information on this free service.
For more information, please see: http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=2982.
The Metropolitan Policy Program at Brookings recently released a report that compared the change in geographic distribution of the low-income population to trends of the federal Earned Income Tax Credit (EITC) recipients’ location. The data used to evaluate the change in geographic distribution was measured between 1999 and 2007 in the nation’s 10 largest metropolitan areas. The researchers uncovered that the distribution of low-income populations mirrored the distribution of EITC recipients. This similarity in distribution shows that EITC has operated as an effective tool to evade poverty. EITC has effectively adapted to the conditions of recession, and is an important resource for low-income populations regardless of their location.
For more information, please see: http://www.brookings.edu/~/media/Files/rc/papers/2011/0217_eitc_poverty_kneebone/0217_eitc_poverty_kneebone.pdf
Individual Development Accounts
The West Coast Poverty Center released a short summary about a study that explores matched savings programs and low-income people's ability to accumulate assets depending on individual desires to save and ability to act on those preferences. The paper defines "time preference," a concept that describes how present- or future-oriented a person may be, and discusses the ways in which variations in time preferences are important for understanding individual financial outcomes. The researchers used data from a 2002-2009 matched savings program to conduct factor analysis, and found that persons with lower future orientation had significantly lower average savings deposit amounts in their first year in the matched savings program.
For more information, please see: http://depts.washington.edu/wcpc/sites/default/files/Flash/PFLASH.Klawitter2013.1.pdf