EITC/Asset Building

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.


This section presents research and reports on the Earned Income Tax Credit (EITC) and asset building for low-income families.

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General Topic

Asset Poverty and the Importance of Emergency Savings, October 2013

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

Financial Literacy, Financial Education and Downstream Financial Behaviors, October 2013

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

Integrating Financial Security and Asset-Building Strategies, April 2013

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

AFI Innovative Projects and New Strategies, 2013

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

Financial Empowerment Training for Social Service Programs, 2013

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

New Tools for Success for Assets for Independence (AFI) Grantees, November 2012

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

Now Accepting Applications for Assets for Independence (AFI) Project Funding, October 2012

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

Economic Security for Extremely Vulnerable Families: Themes and Options for Workforce Development and Asset Strategies, September 2012

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.

For more information, please see: http://www.urban.org/UploadedPDF/412699-Economic-Security-for-Extremely-Vulnerable-Families.pdf?RSSFeed=UI_Poverty,AssetsandSafetyNet.xml

Sharing Risks and Returns: Social Impact Investment to Scale Up Effective Programs, September 2012

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

The New York Noncustodial Parent EITC: Its Impact on Child Support Payments and Employment, July 2012

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

Assets for Independence (AFI) Serving Domestic Violence Survivors Toolkit, April 2012

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

Assets for Independence (AFI), March 2012

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

Building Assets*Building Stronger Families Financial Education Activities, 2012

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

Empowering Women Through Financial Awareness and Education, 2012

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, 2012

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.

View the Web Site Here.

View the Outreach Toolkit Here.

Assets and Opportunity Scorecard, November 2011

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/

Taking Stock of Ten Years of Research on the Relationship between Assets and Children’s Educational Outcomes: Implications for Theory, Policy and Intervention, November 2011

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

Creating Pathways to Opportunity, October 2011

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

Is Poverty Incompatible with Asset Accumulation?, June 2011

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

A Reference Manual for Child Tax Benefits, April 2011

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

Saving for Success: Financial Education and Savings Goal Achievement in Individual Development Accounts, 2011

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

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Earned Income Tax Credit (EITC)

Map: The Earned Income Tax Credit in Your County, January 2014

The Brookings Institution released an interactive map in which users may explore EITC take-up rates at the county level nationwide. Darker colors indicate higher value, while grey shading indicates unavailable data. According to this tool, the southeast part of the country provides the highest EITC take-up rates.

For more information, please see: http://www.brookings.edu/research/interactives/2014/county-eitc-map?utm_campaign=Brookings+Brief&utm_source=hs_email&utm_medium=email&utm_content=12249593&_hsenc=p2ANqtz-9klyF0eKPZxsNqHJcR6BDoAl-DSzeY

Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty, July 2013

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

Earned Income Tax Credit (EITC) Promotes Work, Encourages Children's Success at School, Research Finds, Center for Budget and Policy Priorities, April 2013

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

Encouraging Savings for Low- and Moderate-Income Individuals, April 2013

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 Earned Income Tax Credit (EITC): Linking Income to Real Health Outcomes, March 2013

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

Earned Income Tax Credit Awareness Day, January 2013

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

Webinar: Engaging Temporary Assistance for Needy Families (TANF) Participants in Tax Filing Assistance, January 2013

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]

Podcast: The Earned Income Tax Credit (EITC) and Tax Refunds for Low-Income Tax Filers, December 2012

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.

Click here to: Listen to the Podcast or to: Read the Transcript

The Earned Income Tax Credit for Single Mothers: Insurance Without Disincentives?, December 2012

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

Webinar: Building an EITC Coalition, July 2012

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]

Studies Show Earned Income Tax Credit Encourages Work and Success in School and Reduces Poverty, June 2012

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

EITC Platform, March 2012

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/

The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit, June 2011

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

Ten Years of the EITC Movement: Making Work Pay Then and Now, April 2011

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

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Individual Development Accounts

Savings and Personal Discount Rates in a Matched Savings Program for Low-Income Families, December 2013

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

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