Getting People to Save Their Tax Refund, The Largest Check They Get All Year
Tax-ﬁling season can be a time of great stress, but it can also be one of the best opportunities all year for individuals to build up their short-term savings. In 2016, 73% of tax ﬁlers received a tax refund, averaging $2,857. This can often be the largest single deposit many receive all year.
In 2006, the IRS introduced the Form 8888, which enables tax ﬁlers to easily split their tax refund into multiple accounts (up to three), thus making it possible for recipients to directly set aside a portion of their refund into a savings account.
Through the Robin Hood Foundation, we partnered with Ariva to run a ﬁeld experiment testing different interventions, with the goal of increasing savings rates through Form 8888 and increasing attendance at a tax preparation site.
Ariva operates nine tax sites in the Bronx and one tax site in Manhattan, serving over 10,000 tax ﬁlers each year. Their main location is in the Highbridge area of the Bronx and serves over 4,000 tax ﬁlers each year. Over 40% of the Highbridge residents live below the poverty line.
Behavioral Diagnosis and Key Insights
To understand the environment where ﬁlers are taking actions, we initiated site visits before tax season began. We conducted two full days of observation, along with ten hours of qualitative interviews with key staff members, preparers, greeters, and other volunteers.
Consolidating themes from the conversations led to these key insights on the tax preparation process:
There was a limited mention of saving. Although Ariva played a video in their waiting room subtly highlighting the Form 8888 and the importance of saving, few greeters, intake persons, or preparers actively discussed saving or the Form 8888 with the client. In addition, none of the forms explicitly asked ﬁlers if they wanted to save, and if so, how much they wanted to.
Their base of volunteers is inconsistent (seasonal worker problems). Since most preparers at a VITA site are seasonal volunteers, consistency with some processes such as where to place the deposit form, how to introduce the Form 8888, and how to assist clients in opening savings accounts can be difﬁcult.