Here is the problem: Families with children are not fully benefiting from tax-based government safety net programs such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). A major reason is that filing for the credits can be complicated and often requires expert assistance. For low-income families, paid preparers can be costly and sometimes provide less than optimal advice.
The IRS-certified Volunteer Income Tax Assistance program (VITA) is a great way for those families to get free tax prep help. But VITA programs are not well known and often hard to get to. Imagine someone who works two jobs, has two kids, and must take three buses to get to a VITA center that may be open for only a few hours each evening.
But what if you could get tax help at the same time you were taking your kids for a check-up at their pediatrician’s office? Imagine one stop-shopping for services that are necessary if not much fun: A flu shot and a tax return.
It is one of those insights that has you asking why didn’t someone think of this years ago. The people who did were two Boston-based pediatricians—Dr. Lucy Marcil and Dr. Michael Hole. They founded a program that turned into StreetCred, which helped 1,700 households claim $3.3 million in refundable credits through the 2016-2018 tax seasons.
Dr. Hole told me that the idea came from a patient who came to his office with a newborn and a toddler. She described the challenges she had filing her tax returns and Dr. Hole, trying to be helpful, sent her to a tax prep clinic that turned out to be across town. After two unsuccessful trips, she asked why she couldn’t get her returns prepared at his office. And an idea was born.
StreetCred now provides enrollment assistance for programs such as SNAP (food stamps) and Head Start. It has expanded beyond Boston to cities in Connecticut, North Carolina, and Texas. It plans to help families set up savings accounts and apply for housing subsidies, child support, and health insurance. Kudos to Kate Griffin at the non-profit Prosperity Now for telling me about this initiative.
Many studies link low incomes with poor health. This can be especially true for children. The EITC and CTC are major sources of income support for those low- and moderate-income families.
The Earned Income Tax Credit is the largest social safety net program in the US, distributing $65 billion in 2017 to 27 million low- and moderate-income households. But about 20 percent of households who are eligible do not file for the credits. And many of those who do, as many as one-quarter, file for the wrong amount—sometimes too much and sometimes too little.
The StreetCred docs use a couple of interesting behavioral tools to nudge patients to use these services. Clinic waiting rooms have posters that urge patients to ask their doctors how they can get more money. And the pediatricians write “prescriptions” for free tax filing services. Patients may not have their returns prepared during a routine office visit, but they often will come back to a site they know and trust.
StreetCred is in its early days, but it appears to be a good model for an important idea—linking medical care with income security that can improve health.
