Tax Filing and Take-Up: Experimental Evidence on Tax Preparation Outreach and EITC Participation

Abstract

Governments and non-profits devote substantial resources to increasing take-up of the Earned Income Tax Credit (EITC) through educational outreach. We study a different approach: policies that encourage tax filing. In a large field experiment, we find that IRS letters about free tax preparation modestly increased filing, with a large share of the new filers claiming the EITC. 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 or directly target the benefit in other ways.