Tax Time - The Savings Opportunity Refunds to Assets
With IRS adoption of refund splitting for Tax Season ‘07, D2D and partners created a Guide for Free Tax Preparation sites.
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Split Refund Resources
Split Refunds: Testing the Promise
In 2003, D2D designed the Refunds to Assets ("R2A") system to test federal tax refund splitting on a small scale.
R2A-1: The first year
Working with its community partner CAPTC and financial partner Bank of Oklahoma, D2D pioneered a "splitting tool" which enabled tax filers to direct part of their refund to a savings account or for a mortgage payment.
Results were striking. 30% of the over 500 individuals offered the service wished to use it.
Refund Splitting Goes to Scale
This began three years of pilot tests increasing in size and culminating in a major change to Federal Tax procedure: the provision of refund splitting for all tax refund recipients through the introduction of IRS Form 8888.
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Tax Time is the Right Time
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Nearly $110 billion was refunded for tax year 2005 to 65 million tax filers with incomes under $40,000 – nearly $1,700 each, on average. Receipt of a sizable tax refund provides the opportunity for tax filers to make a savings decision and direct a portion of their refund to a savings account.
A Simple need: The Ability to split a refund
The potential of this opportunity went unrealized, however, when tax filers could direct deposit their refund to only one destination. Filers needed the ability to ‘split’ their refund and decide, at the time of filing, to pre-commit a portion to saving.
D2D’s Role
D2D is committed to making tax time saving easy, efficient, accessible and scalable for lower income Americans. With split refunds, it began working with community based organizations and then helped elevate the issue to a national audience.