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Tax Filing and Take-Up: Experimental Evidence on Tax Preparation Outreach and Benefit Claiming

February 2022

From Journal of Public Economics 

The U.S. federal government, states, and non-profits all devote substantial resources to increasing take-up of refundable tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) through educational outreach. The authors of this article study a different approach to increasing take-up: policies that encourage tax filing. In a large field experiment, they find that IRS letters about free tax preparation modestly increased filing, with a large share of the new filers claiming the EITC and the CTC. The results suggest policies that increase filing can be an effective way to increase take-up of tax-administered social benefits, even policies that do not raise awareness of the benefit itself.