The trouble with tax season: Three ways to better support filers with low-to-moderate incomes
As a national nonprofit fintech and advocacy organization, SaverLife is committed to creating a world where all people can achieve financial stability and build wealth. To bring our vision to life, we prioritize listening to SaverLife members and working with them to advocate for meaningful financial policy change. Why? Because we believe that uplifting our members’ voices and bringing them into critical conversations on systems change is the only way to design an economy that works for everyone, especially for people living with low-to-moderate incomes.
With another tax season come and gone, we’ve had the opportunity to listen to over 9,000 members who took the SaverLife Tax Time pledge. And while many of our members have shared how they’ve taken steps toward their financial goals using their tax refunds, many have also addressed major challenges that they encountered while filing.
Take Kimberly for example. In between work, school, and caring for her family, she has little free time left for handling administrative tasks around the house. However, when her Child Tax Credit (CTC) — a credit of up to $2,000 for food, clothing, child care, and other daily necessities — didn’t arrive after filing her taxes, Kimberly knew that she needed to call the IRS for clarification. “I sat on the phone for two hours waiting for someone,” she explains.
Unfortunately, Kimberly’s experience isn’t an isolated incident. In 2021, SaverLife surveyed members about the impact of the CTC on their lives. Through this research, we found that innumerable households weren’t getting this important credit. They also shared that they had little luck reaching an IRS representative and had lost the phone connection, gotten hung up on, or were told that they had to wait another 30 days. Even after the hassle of connecting with the IRS, only 54% of those Saverlife member households received their payments in full and on time.
The breakdown between filing for the CTC and actually receiving it is symptomatic of a much larger problem. The tax system is missing the mark when it comes to helping people with low-to-moderate incomes file and maximize their returns. However, there are actionable steps that can be taken to better address the lived experiences of people taking home less than $50,000 before, during, and after the filing process.
Here are three ways that we can uplift and support all tax filers, no matter their income bracket:
Advocate for smart, human-centered reforms at the IRS. Whether it’s shortening the wait time for customer service or improving access to professional bookkeeping services, there are numerous ways that the IRS can place the needs, pain points, and goals of all people at the core of its efforts.
Support advocacy to expand tax credits. The CTC is just one way that expanded tax credits can make a lasting impact on the daily living expenses of working families. You can follow organizations like Prosperity Now, Economic Security Project, the Center on Budget and Policy Priorities (and SaverLife too!) to learn more about the tax credits they’re advocating for and why.
Commit to equity initiatives that are grounded in the lived experiences of people with low-to-moderate incomes. A fair and inclusive financial system is founded on the stories, feedback, and data of those who have been historically excluded from it. To create a tax code that accounts for all people’s financial needs and aspirations, there must be a universal push across sectors to prioritize the voices of marginalized communities.
Filing taxes is just one facet of people’s complex financial lives. But it carries significant implications for how someone achieves financial stability and builds lasting wealth. If we want to create a financial system that accounts for this complexity and allows someone to achieve their goals, we need to start by listening to the people who are being left out of the conversation. Advocating for tax initiatives and credits that center the realities of individuals with low-to-moderate income is just one way that we can create a world where all people can create financial prosperity for generations to come.
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