Study Shows Tax Return Delay Could Hurt Low-Income Families

Millions of low- and moderate-income Americans who claim certain tax credits will have to wait weeks longer than usual this year for their federal income tax refunds because of a new law aimed at reducing fraud.

The delay could prove costly for countless families “in relatively vulnerable financial circumstances,” finds a new study from the Brown School and the Tax Policy Center.

The Protecting Americans from Tax Hikes Act (PATH Act) of 2015 requires the Internal Revenue Service to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15. Because of weekends and the Presidents Day holiday, the IRS said in a recent statement that affected taxpayers may not have access to their refunds until the week of Feb. 27.

“Many of these families file their returns early and use refunds quickly to pay down debt or for spending on necessities,” said Stephen Roll, research assistant professor at the Brown School’s Center for Social Development and co-author on the study.

“Delaying refunds will likely lead to additional financial hardships for some of these families, who in previous years had received and used their refunds before Feb. 15,” he said.

The study, “Delaying Tax Refunds for Earned Income Tax Credit and Additional Child Tax Credit Claimants,” is co-authored by Elaine Maag, senior research associate at the Tax Policy Center, and Jane Oliphant, program manager at the Center for Social Development.

“For the average American household, the tax refund is a nice yearly bonus that likely does not impact their finances in any major way,” Roll said. “However, for EITC or ACTC households affected by this delay in the refund, the tax refund is often the biggest single payment they’ll receive in a year.

“Imagine that you didn’t have much in savings and your income was entirely taken up by your expenses,” he added. “Then imagine that, without much warning, an entire month’s worth of your income just didn’t come for two or three weeks longer than you expected. That’s potentially what these households are facing.”

For the 2016 tax year, the Tax Policy Center estimates that on average EITC beneficiaries with children will receive a $3,314 tax credit. The median EITC or CTC family with children reported only $400 in liquid assets, and 69 percent reported credit-card debt at a median rate of $2,000. Fewer than half of these families reported they could access
$2,000 in an emergency, and barely one-third are homeowners.

What can impacted families do?

“Filing early may help, but only to an extent,” Roll said. “Even if you file on Jan. 23, the first day that the IRS begins accepting returns, there will still be a delay until at least the 15th of February.  Filing early ensures that families will receive their refund as quickly as possible.”

Beyond that, Roll said, there are steps families can take to minimize the impact of this delay.

“For example, families should be aware of this delay and try to avoid taking on extra debt, and high-cost debt in particular, at a point when they may have to wait weeks to pay it off,” he said. Additionally, families may be tempted to rely on ‘refund anticipation loans’ that function as short-term loans to provide the expected value of the refund early.

“While these loans can potentially provide families with quick cash when they need it, they can also come with a number of fees or hidden costs that may cause more harm than good,” Roll said.

Social Work Students Respond to the #BlackLivesMatter Movement and the Neutrality of Social Work Program Administrators

UC Berkeley Social Welfare graduate students stand in solidarity with the #BlackLivesMatter movement, and we are speaking out against nationwide police brutality and systemic violence against the Black community. As students and as social workers, we feel a responsibility and an obligation to issue a statement in support of the community action and the demands issued by the #BlackLivesMatter movement.

Our criminal justice system continues to fail the Black community. It is intolerable that the lives of Oscar Grant, Michael Brown, Eric Garner, Tamir Rice, Akai Gurley, McKenzie Cochran, Kimani Gray, and countless other Black men and women were taken by individuals who took an oath to protect and serve them.

tumblr_mz6ujyfZXV1qm0yhvo1_500The criminalization of and violence against Black men and women speaks to larger systems of racism and oppression that we, as social workers, are ethically bound to interrupt. Students questioned the school’s response after the UC Berkeley School of Social Welfare administration had not formally issued a statement.

The silence has been deafening, and it has been particularly felt by the Black community throughout the institution. This lack of support on campus for students of color is disgraceful, and completely unacceptable, especially for an institution such as Berkeley that prides itself on diversity, inclusion, and a history of activism.

We join our social work colleagues from Columbia University, Portland State University, Washington University, Smith College, and numerous other schools and organizations that have made public statements to call for community members to demand social reform. As students at UC Berkeley’s School of Social Welfare, we too will use our voices to break the silence that pervades our academic community and act on the principles of social justice that we have been discussing in our classroom.

We are in solidarity and thankful to participate in the actions and healing spaces that Berkeley students and community members have organized: The Black Student Union action on December 4th, the walkout organized by the Black Student Union at Berkeley HS on December 10th, the organizing efforts that brought the Millions March Rally from Berkeley to Downtown Oakland on December 13th, and the December 15th  “Not On Our Watch” silent protest organized by the Black Staff and Faculty Organization (BSFO), a response to the effigies which were hung in Sproul plaza. Our goal is to uphold the #BlackLivesMatter movement’s focus on disrupting white supremacy, and we must acknowledge how Black people are mistreated in the United States, including on the UC Berkeley campus.

We invite the Berkeley Social Welfare administration as well as other Schools of Social Work to discuss how our programs can better model social work praxis and include the #SSWBlackLivesMatter organizing movement in their plans for Spring 2015. We will continue to mobilize, and we are prepared to take action on our campus and within our community – because at the end of the day, #BlackLivesMatter.

Media Contact

Ariana Allensworth | ariana.allensowrth@berkeley.edu

UC Berkeley MSW Graduate Student Body

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