The Earned Income Tax Credit, Family Complexity, and Children’s Living Arrangements

Abstract

Demographic shifts over the last half-century have resulted in dramatic changes in family structure. These changes have implications for the social safety net because public assistance programs define families differently. This article focuses on a critical poverty-alleviation policy, the Earned Income Tax Credit (EITC), to document family complexity in the United States. We find that more than 60 percent of children in lower-income families reside in households with ambiguity in tax filing and thus in claiming valuable credits. Tax filing ambiguity driven by family complexity is especially common among households with Black children, highlighting significant racial inequities in the tax treatment of complex families. We also consider two reforms to reflect the realities of families today: the childless EITC and a noncustodial parent EITC.