Increasing Use of the Earned Income Tax Credit (EITC) by Low-Income Families

The Issue

The Earned Income Tax Credit has been described as the largest and most successful federal assistance program for low-income working families. Last year, the EITC was responsible for elevating the families of 5 million children above the federal poverty line. However, many eligible families do not take advantage of this valuable income supplement for various reasons, as indicated by the findings of Rural Families Speak.

Rural Families Speak is a longitudinal study assessing changes in the well-being of rural families in the wake of welfare reform and associated reductions in programs and services. In the first year of the study, only about one-third of the Latino participants who were eligible for the EITC had actually received the credit. The data indicated that lack of and/or inaccurate information were common reasons for non-receipt. Language and cultural barriers further diminished the likelihood that Latino families knew about and claimed the EITC.

What Has ANR Done?

Recognizing the need to reach out to rural families about the EITC, Rural Families Speak distributed English and Spanish IRS materials explaining eligibility and the filing process to research participants between their first- and second-year interviews. County advisors were informed about the lack of rural families' use of the EITC and the need for education about the credit. EITC information is being included as part of EFNEP (Expanded Food Nutrition Education Program) and FSNEP (Food Stamp Nutrition Education Program) efforts. The University of California Cooperative Extension Spanish Broadcast and Media Services is disseminating written materials and radio announcements.

The Payoff

Education Doubles Families' Use of the EITC

As a result of distributing educational materials about the credit to low-income Latino families living in rural communities, more than twice as many families received the credit the following tax year. The additional information provided by EFNEP and FSNEP and in public service announcements will further increase the number of families taking advantage of this valuable income supplement, contributing to their financial security and well-being.

Contact

Supporting Unit:

UC Consumer Economics Extension
 
Karen P. Varcoe, Ph.D.
Human Resources Program Leader
139 Highlander Hall
University of California
Riverside, CA 92521
(909) 787-5241