Financial Instability in the Earned Income Tax Credit Program: Can Advanced Periodic Payments Ameliorate Systemic Stressors?. Issue 6 (November 2021)

• Record Type: Journal Article
• Authors: Greenlee, Andrew; Kramer, Karen; Andrade, Flavia; Bellisle, Dylan; Blanks, Renee; Mendenhall, Ruby
• Is Part Of: Urban affairs review. Volume 57:Issue 6(2021)
• Page Start: 1626
• Page End: 1655
• Publication Date: 2021-11
• Subjects: Earned Income Tax Credit -- poverty -- working poor -- financial instability -- stress; City planning -- Periodicals; Aménagement urbain; Développement urbain; Planification urbaine; Politique urbaine; Recherche; Sociologie urbaine; Urbanisme; Ville; États-Unis; Périodique électronique (Descripteur de forme); Ressource Internet (Descripteur de forme); 307.76
• DOI: 10.1177/1078087420921527
• Languages: English
• ISSNs: 1078-0874

Abstract

The Earned Income Tax Credit (EITC) serves more than 26 million U.S. tax filers every year. The EITC is distributed annually at tax time; however, past research suggests that lump-sum disbursements leave households with a lack of funds to deal with financial emergencies throughout the year. Drawing upon the data from a pilot program conducted in 2014–2015 in Chicago, this study analyzes how advanced periodic payments help mitigate financial instability for EITC recipients. Interview participants relate that advanced periodic payments result in a reduction in perceived stress, lower levels of debt, fewer unpaid bills, and the ability to engage youth in extracurricular activities. The findings provide a unique perspective on the ways in which low-income households cope with financial instability and stress and suggest that payment frequency options can play a small but important role in the way in which the EITC operates as a support mechanism.