Association of Tax Preparation Service in a Pediatric Clinic With Increased Receipt of The Child Tax Credit

Abstract

This cross-sectional study analyzes the use of StreetCred intervention and the child tax credit and earned income tax credit claims by different races and ethnicities.

In the US, poverty disproportionately impacts racial and ethnic minority children,¹ creating health inequities,² which the COVID-19 pandemic has exacerbated.³ The fully refundable child tax credit (CTC) of the American Rescue Plan Act, which is worth $3000 to $3600 per child, could reduce child poverty by 40%. It includes families without income. However, tax filing barriers (eg, parents who are not US citizens and lack internet access or technological devices) may prevent 2.3 to 5 million children from receiving the CTC.⁴ We hypothesized that a tax service (StreetCred) embedded in a trusted pediatric clinic, would increase the receipt of the CTC and the earned income tax credit (EITC).

Methods

This cross-sectional study assesses the association of StreetCred with increased CTC and EITC receipt. The Boston University Medical Campus Institutional Review Board deemed this study exempt from review because it used deidentified data. Participants in StreetCred provided written or verbal informed consent.

StreetCred delivered tax services at Boston Medical Center (BMC) pediatric clinic under the Internal Revenue Service Volunteer Income Tax Assistance (VITA) program. The clinic serves approximately 13 000 patients, of whom 85% have Medicaid insurance, 30% are immigrants, and 70% self-identify as being from a racial and ethnic minority group. StreetCred clients included parents of BMC pediatric patients, adult BMC patients, and community members.

After completing the tax returns (January-July 2021), written consent was obtained from StreetCred clients to use their tax data for analysis. The families in the pediatric clinic (nonclients) verbally consented and completed a control tax survey (July-October 2021). Eligible participants were BMC patients 18 years or older. Study size was based on a convenience sample. Participants self-identified their race and ethnicity (Table) to prevent bias or confounding on the basis of race.

Table. Tax Filing Behavior and Demographic Characteristics of Nonclients and Clients.

Variable	No. (%)		P value
	Nonclients (n = 98)	Clients (n = 88)
Filing status
Head of household	35 (35.7)	37 (42.1)	.51
Married
Filing jointly	15 (15.3)	10 (11.4)
Filing separately	4 (4.1)	2 (2.2)
Single	42 (42.8)	39 (44.3)
No answera	2 (2.0)	0
Sex
Female	81 (82.6)	73 (83.0)	.39
Male	15 (15.3)	15 (17.1)
No answera	2 (2.0)	0
Raceb
African American or Black	59 (60.2)	55 (62.5)	<.001
American Indian or Alaska Native	1 (1.0)	1 (1.1)
Asian	3 (3.1)	7 (8.0)
White	14 (14.2)	10 (11.4)
Otherc	16 (16.3)	1 (1.1)
No answera	5 (5.1)	14 (15.9)
Ethnicityb
Hispanic or Latinx	17 (17.4)	16 (18.2)	.008
Non-Hispanic or Latinx	60 (61.2)	67 (76.1)
No answera	21 (21.4)	5 (5.6)
Age, median (IQR), y	35 (30-41)	34 (24-44.5)	.77
No. of dependents, median (IQR)	2 (1-3)	0.5 (0-1)	<.001

^a No answer denoted participants with missing information.

^b Race and ethnicity were self-identified.

^c Other was a general category of participants who did not identify with the other racial categories.

Receipt of CTC was the primary outcome, and receipt of EITC was the secondary outcome. Because CTC is based on the number of dependents, we restricted CTC analyses to clients with 1 to 3 dependents to create a normal distribution and control for this confounder. We used simple regression models, with being a client as the exposure and EITC and CTC as the outcomes. To avoid residual confounding, additional models were made by adjusting for possible confounders (race and ethnicity, sex, and age).

Results

Of 325 StreetCred clients (including BMC and non-BMC patients), 88 were also BMC patients and consented to the use of their tax data. A group of 98 nonclients completed the control tax survey. A significant difference between the 2 groups was the number of dependents (Table).

Among nonclients, 19 (19.4%) did not file taxes in 2021 (vs 16 clients [18.2%]), 50 (51.0%) had not claimed the CTC, and 40 (40.8%) desired help accessing the CTC. Most of the clients and nonclients self-identified as being racial and ethnic minority individuals (Table). The CTC amount received was based on being a client and the number of dependents. For 1 to 3 dependents, the amount received was independently associated with using StreetCred (Figure). Clients received $730 excess CTC amount compared with nonclients ($1150 vs $420; P < .001).

Figure. Mean Child Tax Credit Amount by Number of Dependents in Nonclients and Clients.

For the EITC, 83 nonclients (84.6%) reported $0 received. Clients received $495 excess the EITC amount compared with nonclients ($769 vs $274; P = .005). After adjusting for race, sex, and age, CTC and EITC amounts received were significantly different between the 2 groups ($637 [P = .004] vs $544 [P = .005]).

Discussion

Embedding tax return preparation service was associated with increased receipt of the CTC and EITC, which may reduce child poverty. We hypothesized that the CTC amount was higher for clients than nonclients because of a higher percentage of clients who claimed the CTC and received more accurate tax return preparation from the VITA program.

We believe the StreetCred intervention addresses health and economic equality among racial and ethnic minority groups. Receipt of the EITC disproportionately benefits maternal-child health for Black families.⁵ However, racial and ethnic minority families are less likely to file taxes.⁶ In this study, the result was similar in the Black and Hispanic or Latinx cohorts: 19.4% of nonclients did not file taxes in 2021. Barriers to filing included adverse lived experience with government services, no tax-filing requirement, and inaccessible tax-related technology. Embedding tax services in clinics may help overcome these barriers.

This study has several limitations. Client and nonclient self-selection and consent were likely nonrandom. Nonclient self-reported data may have introduced bias. However, perception of tax credit receipt is important. Education on tax credits is empowering; clients shared that learning that the EITC increases with wages inspired the desire to work more, which improves economic stability. The number of dependents differed significantly between groups. However, analyses restricted to clients with dependents found an independent association between StreetCred and CTC receipt.

A randomized clinical trial could confirm these findings. Child poverty is a health concern that physicians can address by embedding a tax service into pediatric clinics in collaboration with the VITA program in their communities.