Tax Filing and Other Financial Behaviors of EITC-Eligible Households: Differences of Banked and Unbanked

12 Pages Posted: 29 Jan 2012 Last revised: 10 Feb 2012

See all articles by Younghee Lim

Younghee Lim

Louisiana State University - College of Human Sciences and Education - School of Social Work

Michelle Livermore

Louisiana State University - College of Human Sciences and Education - School of Social Work

Belinda Creel Davis

Louisiana State University - College of Human Sciences and Education - Department of Political Science

Date Written: January 27, 2012

Abstract

Holding a bank account is crucial to the income-maximizing and asset-building of households. This study uses 2008 survey data of EITC-eligible households assisted at Volunteer Income Tax Assistance (VITA) sites to document their tax filing behavior and use of Alternate Financial Services (AFS). Specifically, the differences in tax filing and AFS use between banked and unbanked EITC-eligible households are examined. Findings reveal that unbanked status is associated with a lower likelihood of receiving a federal tax refund for tax year 2007 (TY 2007), a lower likelihood of filing a federal tax return for the previous tax year (TY 2006), a lower likelihood of receiving tax refunds via direct deposit or cashing at banks, and a higher likelihood of using check cashing stores. Findings suggest that policy changes and educational efforts should continue to focus on bringing the unbanked into the financial mainstream.

Keywords: alternative financial services, banking status, EITC, tax filing experience, unbanked

Suggested Citation

Lim, Younghee and Livermore, Michelle and Davis, Belinda Creel, Tax Filing and Other Financial Behaviors of EITC-Eligible Households: Differences of Banked and Unbanked (January 27, 2012). Journal of Financial Counseling and Planning, Vol. 22, No. 2, 2011, Available at SSRN: https://ssrn.com/abstract=1992998 or http://dx.doi.org/10.2139/ssrn.1992998

Younghee Lim (Contact Author)

Louisiana State University - College of Human Sciences and Education - School of Social Work ( email )

132 Hodges Hall
Baton Rouge, LA 70803
United States

Michelle Livermore

Louisiana State University - College of Human Sciences and Education - School of Social Work ( email )

132 Hodges Hall
Baton Rouge, LA 70803
United States

Belinda Creel Davis

Louisiana State University - College of Human Sciences and Education - Department of Political Science ( email )

132 Hodges Hall
Baton Rouge, LA 70803
United States

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