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Sydnee Caldwell, Scott Nelson, Daniel Waldinger

Articles by Sydnee Caldwell, Scott Nelson, Daniel Waldinger

Uncertainty about the size of annual tax refunds hinders the effectiveness of tax-based U.S. redistribution

April 8, 2021

Each tax season, many families in the United States receive additional income through refundable tax credits, among them the Earned Income Tax Credit and Child Tax Credit. These two tax credits can comprise a significant portion of income for the 25 million and 48 million recipients of the EITC and CTC, respectively.

The average EITC recipient, for example, receives a tax refund equal to 12 percent of their annual income. These credits are delivered as one-time payments shortly after individuals file their taxes. 

The recently enacted American Rescue Plan both increases the Child Tax Credit and expands eligibility for it as well as the Earned Income Tax Credit. Yet because the rules governing tax credits are often complex, it can be difficult for individuals to figure out how

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Tax Refund Uncertainty: Evidence and Welfare Implications

April 8, 2021

Download File040821-WP-Tax Refund Uncertainty-Caldwell Nelson and Waldinger


Sydnee Caldwell, University of California, BerkeleyScott Nelson, University of ChicagoDaniel Waldinger, New York University


Transfers paid through annual tax refunds are a large but uncertain source of income for poor households. We document that low-income tax-filers have substantial subjective uncertainty about these refunds. We investigate the determinants and consequences of refund uncertainty by linking survey, tax, and credit bureau data. On average, filers’ expectations track realized refunds. More uncertain filers have larger differences between expected and realized refunds. Filers borrow in anticipation of their refunds, but more

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