Earned income tax credit (EITC) benefit income is paid out in a lump-sum around tax time. We investigate whether savings and debt among EITC-eligible families reflect the timing of payments. Using nationally representative, individual-level data on self-reported debt and savings outcomes, we search for differences in monthly behavior between EITC-eligible and -ineligible households. We find evidence that credit card and unsecured debt holding among EITC-eligible families reflects the timing of the EITC, with low debt levels at tax time relative to other months. Debt holding among ineligible families with children does not exhibit a similar pattern. We find limited evidence of intrayear patterns in savings behavior among EITC-eligible families. (JEL D14, I38, H23).
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Economics and Econometrics