Do Doubled-Up Families Minimize Household-Level Tax Burden?

Jones, Maggie R.; O’Hara, Amy

doi:10.17310/ntj.2016.3.05

Cited by 18 publications

(12 citation statements)

References 8 publications

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“…Consistent with the observations of Jones and O'Hara (2016), we also document a shift towards three child tax units in 2009 among those eligible for EITC benefits. However, this may have been to the financial detriment of these households.…”

supporting

confidence: 86%

“…We estimate the extent to which they would receive the EITC and refundable child credit and pay taxes (assuming single filing status) based on wages only, but limited such that adding a child never causes a non-filer to have a positive tax burden. 15 Although this estimate is above the Jones and O'Hara (2016) 2005-2010 average estimate of about $500 per reassigned child, they estimate a larger aggregate total tax effect of $440 million in 2010. This reflects the fact that they include the entire stock of children claimed by someone other than their parent (or other expected claimant based on CPS relationship status imputations) whereas we focus on the one-year flow of reassigned children and also limit to those in persistent multiple tax unit households.…”

mentioning

confidence: 85%

“…Two recent papers have explored such strategic claiming of dependents: Tong (2014) and Jones and O'Hara (2016). Tong (2014) compare the number of dependents claimed on tax returns to the number expected based on the relationships reported on the CPS questionnaire.…”

mentioning

confidence: 99%

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Whose Child Is This? Shifting of Dependents Among EITC Claimants Within the Same Household

Larrimore¹,

Mortenson

Splinter³

2017

FEDS

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supporting

confidence: 86%

mentioning

confidence: 85%

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Whose Child Is This? Shifting of Dependents Among EITC Claimants Within the Same Household

Larrimore¹,

Mortenson

Splinter³

2017

FEDS

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“…Such strategic sorting behaviors are found among related persons (i.e., children, grandchildren, siblings, parents, and ''other relatives'' of the CPS reference person) in ''doubled-up'' households to increase the EITC refund (Jones and O'Hara 2014). 9 It is unclear whether divorced parents also engage in similar strategic behaviors.…”

Section: Literature Reviewmentioning

confidence: 99%

EITC Use in Shared Placement Cases

Scholz

Brown

2016

Public Finance Review

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We use a unique data set containing information from state individual income tax returns, Wisconsin unemployment insurance wage data, and data collected by hand from Wisconsin courthouses to examine the earned income tax credit (EITC) usage by divorced men and women with children. We show that a large percentage of divorced adults with children file tax returns. Moreover, many receive the EITC benefit through the tax system, which results in substantial additional resources for the household. We find little evidence of divorced parents engaging in strategic allocations of their children to maximize EITC claims. We also find that many EITC-eligible low-income parents fail to claim it. A potentially cost-effective way to increase the resources available to low-income working families is to provide easy-to-understand information on child-related provisions in the tax code at the time the court order is established. Downloaded from The earned income tax credit (EITC) is designed to enhance the value of work for low-income individuals, particularly those with children. Taxpayers gain access to the EITC by having earnings and incomes below certain thresholds and by filing a tax return that reports an EITCqualifying child. 1 A child must live with the taxpayer more than half the year to be EITC-qualifying (this is also known as the residency test).Tax returns do not collect information on the location of children during the year. Consequently, without additional information, it is impossible to know whether households eligible for the EITC are failing to get the credit. Child placement data linked to tax return information can be useful for learning more about two aspects of EITC claiming patterns. First, the child placement data used in this article identify the custodial parent and the noncustodial parent. The custodial parent generally has physical placement of the child. If true, then EITC claims made by someone other than the custodial parent could be potentially noncompliant. Hence, by linking child placement and tax data, we have the opportunity to assess whether a household that appears eligible for the credit fails to receive it, and whether households that are receiving the credit perhaps should not be. Second, many individuals with children have low or moderate income after divorce. Children in these households may be particularly vulnerable. Hence, given our interest in factors affecting economic well-being, it is useful to learn more about the level and composition of resources available to families.The rules determining who can legally claim an EITC-qualifying child are complex, particularly in cases where the biological parents are not living together. It is likely, therefore, that typical taxpayers do not fully understand these rules. For example, the rules defining a dependent versus EITCqualifying child for tax purposes differ. A taxpayer claiming a dependent exemption must meet, among other things, the support test, which requires the taxpayer to provide at least half the support for the child in ques...

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“…For example, how children will be claimed on tax returns may conflict with reporting in survey data. Jones and O'Hara () and Splinter, Larrimore, and Mortenson () find that some households with multiple tax units appear to reassign dependents to lower tax liabilities.…”

mentioning

confidence: 99%

Who Pays No Tax? The Declining Fraction Paying Income Taxes and Increasing Tax Progressivity

Splinter

2018

Contemporary Economic Policy

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Using federal individual income tax data, this paper presents the first long‐run estimates of the fraction paying no income tax. Between 1985 and 2015, the fraction of working age adults paying no tax increased from 20% to 36%. A decomposition shows that almost all of this increase resulted from changes in tax policy, especially from more generous tax credits. Increasing tax progressivity over the last three decades also resulted from more generous tax credits. The substantial federal tax changes enacted in 2017 are forecasted to temporarily increase both the fraction paying no tax and individual income tax progressivity. (JEL H22, H24, H31)

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Do Doubled-Up Families Minimize Household-Level Tax Burden?

Cited by 18 publications

References 8 publications

Whose Child Is This? Shifting of Dependents Among EITC Claimants Within the Same Household

Whose Child Is This? Shifting of Dependents Among EITC Claimants Within the Same Household

EITC Use in Shared Placement Cases

Who Pays No Tax? The Declining Fraction Paying Income Taxes and Increasing Tax Progressivity

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