Tax Benefits
The Challenge
Filing a tax return is often costly and complicated, and that’s hurting families all across the country.
As much as $15 billion in federal tax benefits goes unclaimed every year. Ultimately, this is the result of a status quo that requires millions of Americans to spend time and money they don’t have to fulfill the prerequisite for receiving benefits: filing a tax return. Tax benefits are some of the largest, most effective anti-poverty tools in the United States, but under our current system, too many people miss out on the support they need.
For too long, the status quo has been a tax filing system that stands in the way of getting flexible cash from tax benefits into people’s hands. Aside from the lucky few able to access nonprofit tax prep like the Volunteer Income Tax Assistance (VITA) Program, the system gives most people two options:
- Collectively pay billions of dollars each year to file their tax returns via commercial preparers
- Not file altogether, thus missing out on billions of dollars in tax benefits for which they’re eligible.
By streamlining and simplifying the tax filing process, we can help more people file their tax returns for free. Ultimately, simplified tax filing will deliver life-changing cash through tax benefits.
What is flexible cash? Flexible cash—meaning money that individuals and families decide how to spend for themselves—is one of the best ways to empower people toward financial stability. Cash support helps people provide for their basic needs, find and keep living wage jobs, and handle emergencies as they arise. Flexible cash has been distributed through the tax system via tax credits and stimulus payments.
The opportunity
Closing the tax benefits coverage gap
Through the mindful use of technology, Code for America works to ensure all who are eligible for benefits distributed through the tax system actually can claim and receive them. We believe in government providing free and easy tax filing services. To advance that goal, we build products that show what’s possible and enable government to deliver these simplified tax filing services.
Read more about the implications of the tax benefits coverage gap
What is the tax benefits coverage gap? Some people who are eligible for certain tax benefits—usually because their household income falls below a certain threshold—don’t receive their benefits, even if they file a tax return. They may skip over the specific line on the return that would allow them to claim the credit, or they may see it and not quite understand what it means. If these individuals did file and claim benefits like the Earned Income Tax Credit, it’s estimated that they collectively would receive as much as $15 billion in tax benefits every year. These individuals who are eligible for tax benefits but don’t receive them fall into the tax benefits coverage gap.
Our impact
Code for America works with governments to make tax filing easy, free, and mostly automatic.
Since 2020, through our partnership with VITA, our team has worked to revolutionize access to tax filing for filers who need hands-on assistance by running GetYourRefund, the first scalable platform to provide virtual access to VITA services.
In 2021, we launched GetCTC, a free, easy tax filing tool that allowed 200,000 families to claim key tax benefits like the stimulus and expanded Child Tax Credit during the COVID-19 pandemic. This helped spark a national movement to use government technology to advance access to tax benefits for families with low income—a movement that ultimately set the foundation for a historic new simplified filing tool: IRS Direct File.
In May 2023, the IRS announced the pilot launch of Direct File, the first free, public, online tax filing tool in U.S. history. In support of Direct File, Code for America co-founded the Coalition for Free and Fair Filing to defend, promote, and expand the program. Code for America also launched FileYourStateTaxes, a state tax filing tool designed to work with Direct File. FileYourStateTaxes is the first custom implementation of Direct File state filing and is a monumental national model as Direct File scales across the country.
The process was very simple and straightforward, and I received my refund in record time.
$1.2 billion
in tax benefits have been claimed by hundreds of thousands of families using our products
96%
of taxpayers were “satisfied” or “very satisfied” with our state tax filing product, FileYourStateTaxes
1 in 5
people who have filed a tax return using GetYourRefund were first-time filers
In September 2021, Code for America launched GetCTC, a simplified web filing application that facilitated access to the Child Tax Credit and Economic Impact Payments. After running for 10 weeks in fall 2021 and another six months in 2022, GetCTC helped nearly 200,000 households claim an estimated $685 million—an average of $3,500 per return.
In 2023, Code for America co-founded the Coalition for Free and Fair Filing, a national movement to support Direct File and free tax filing. With the Coalition’s organization and support, more than 100 tax experts, more than 100 members of Congress, and more than 250 organizations from every state in the country have expressed support for Direct File. If you’re part of an organization that wants to support free tax filing in the United States, join the Coalition on Free and Fair Filing.
In early 2024, the IRS launched the first-ever free public online tax filing product—Direct File—which simplified the process of filing a federal tax return. Code for America partnered with Arizona and New York to build FileYourStateTaxes, a companion product that allowed Direct File taxpayers to seamlessly file their state returns.
In May 2024, thanks in part to the success of FileYourStateTaxes, the IRS made Direct File a permanent filing option and announced that the program would expand nationwide.
GetYourRefund is Code for America’s free virtual tax filing service, supported by the Internal Revenue Service (IRS). It is designed to help individuals and families from low income households access high quality and trusted tax filing assistance from home. If you run a VITA site and would like to partner with Code for America, reach out to us.
Based on our learnings from GetCTC and GetYourRefund, Code for America has published hundreds of pages of pioneering research on promoting access to tax benefits for families with low income.
Resources
Stories
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