Tipping Point quarterbacks study to increase filing for low-income tax credits

Every year $2 billion in earned income tax credits go unclaimed by low-income California families.

For Americans who earn so little that they effectively owe zero income tax, this time of year offers an opportunity for a financial boost through the Earned Income Tax Credit (EITC). But, given the complexity of the process to file returns and claim both state and federal EITC, few of those who qualify are actually taking advantage of this additional income

Take a look at the numbers:

· Households earning less than $53,930 qualify for up to $6,300 in federal tax credits through the EITC.

· 90% of EITC dollars go to families with children each year and the EITC enjoys bi-partisan support because of its proven track record of financially strengthening low-income families.

· Since 2015, the state of California has offered CalEITC, its own Earned Income Tax Credit for households earning less than $22,302.

· Only about 20% of Californians who qualify for the credit have even heard of it. Many workers who qualify generally do not owe income tax, and thus are not required to file tax returns, but in order to receive EITC or CalEITC, workers must file their tax return and explicitly claim the EITC on both state and federal tax forms.

Workers need to be notified about this opportunity

Up until now, very little research has been done to understand how to increase participation. Tipping Point is funding a study by Golden State Opportunity (GSO) to better understand how to encourage more EITC-eligible households to file their taxes. GSO works to improve the lives of low- and middle-income Californians through a program of research, analysis, public information and education.

For this campaign, GSO will contact 500,000 eligible EITC filers throughout California, explain the benefit, and encourage workers to file and claim their credit. Eligible filers will receive text messages, Facebook ads, or both.

In partnership with California Policy Lab, based at UC Berkeley and UCLA, GSO will then analyze whether the messaging campaign resulted in a higher number of EITC filings.

In the end, this will deepen understanding around which tools most effectively prompt people to file taxes, and thereby inform and improve statewide efforts to boost EITC filing each year. In the process, we hope to contribute to many more households claiming their EITC, increasing the amount of money flowing into low-income communities.

We’ll report back on learnings in coming months. To receive updates about this initiative, as well as our broader efforts to fight poverty in the Bay Area, sign up for our mailing list.

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