VITA Helps Improve Taxpayers’ Understanding of Their Taxes
The results of a new study released last month conducted by researchers from Penn State University and the Penn State Extension reveal clients of Volunteer Income Tax Assistance (VITA) programs in Central Pennsylvania generally benefitted from financial education provided during tax preparation. One particularly interesting finding showed that nearly half (48.8 percent) of the surveyed tax filers served by these VITA programs reported their understanding of taxes increased a lot after receiving tax preparation assistance.
With the VITA grant program now requiring grantee programs to place an emphasis on client tax and financial education, it is heartening to see studies confirming that the tax-filing process is an important teachable moment for low- and moderate income taxpayers. More so, the process for educating clients at VITA sites appears to be as simple as providing clear materials on one-page handouts distributed during the intake process, which allow clients time to look them over in advance of tax preparation.
Couple these handouts with a brief reminder of their messages to clients at the end of tax preparation, and the educational opportunity could lead to real action by taxpayers to improve their financial security and reduce their risks of identity theft or other predatory financial practices.
Some of the financial actions taken by the study respondents after receiving financial education materials during the VITA preparation process include:
- Opting out of pre-approved credit card offers,
- Adding their names to the Do Not Call Registry, and
- Requesting a free credit report.
These actions taken together with other reported savings habits of clients suggest that VITA programs continue to serve as a major source for increasing the financial knowledge of low- and moderate-income households. By engaging clients in these topics and focusing messages on a few key concepts each tax season, VITA clients will become increasingly able to grow their personal assets and be better prepared to handle financial emergencies or the pressures of a downward economy.
By Holden Weisman, Policy Analyst