Refund to Savings 2013: Comprehensive Report on a Large-Scale Tax-Time Saving Program

The Impact of Tax Refund Delays on the Experience of Hardship Among Lower-Income Households

“…The differences between the early and non-early filers are consistent with prior evidence (Grinstein-Weiss et al, 2015). Though early EITC filers have higher incomes and receive larger refunds, they report greater incidence of material hardship in the months prior to tax filing.…”

“…While response rates vary marginally year-to-year, 5.7% of invited TTFE filers responded to the first survey in 2017. Though survey response rates were low, research from prior years generally points to relatively few differences between all TTFE users and those who opt to complete the survey, even as survey respondents do tend to have slightly higher incomes (Grinstein-Weiss et al, 2015). Of those who completed the first survey wave in 2017, 34% took part in the second survey.…”

“…Tax refunds are especially important for lower-income tax filers because they often represent the single largest payment they will receive all year (Morduch & Schneider, 2017;Roll et al, 2018) and thus are an important source of consumption support. Lower-income households use refunds for many purposes: to build savings and pay down debt (Despard et al, 2015;Grinstein-Weiss et al, 2015;Mendenhall et al, 2012;Sykes et al, 2015), getting caught up on overdue bills, making home or car repairs, and making large purchases (Mendenhall et al, 2012;Morduch & Schneider, 2017;Shaefer et al, 2013;Sykes et al, 2015;Tach & Greene, 2014).…”

The impact of state earned income tax credit increases on material and medical hardship

“…As such, refunds act as windfallssignificant lump sum allocations that LMI households can use to meet a variety of material and financial needs they ordinarily could not with their usual monthly incomes. However, refunds are usually exhausted within 6 months of tax filing and not spread out to meet needs over the course of an entire year (Despard et al, 2015;Grinstein-Weiss et al, 2015). Yet, existing research does not describe how and within what timeframe recipients use state EITCs and how these factors may be similar to or different from receipt of the much larger federal EITC.…”

“…The infusion of this large payment into the balance sheets of these households means it is one of the few points during the year where they may not have to manage severe budget constraints and the associated tradeoffs between different necessities. As such, researchers have identified the receipt of the tax refund as an opportune moment for LMI households to engage in an array of positive financial behaviors that can improve their overall well-being, including building savings (e.g., Beverly et al, 2004;Duflo et al, 2006;Grinstein-Weiss et al, 2017;Key et al, 2015), paying down debt (Grinstein-Weiss et al, 2015), and mitigating hardship (Grinstein-Weiss et al, 2016).…”