Happy Tax Day! And Happy Birthday Iris!

Today is April 15th, which means it is Tax Day! Remember to be extra nice today, as some people are more stressed out than usual because it's the last day to file taxes. Studies show a marked increase in car accidents on April 15th likely due to stress or rushing to a tax preparer. As the lead researcher on one study put it, "That's what makes tax day so special from my perspective. It's a widespread stress quite onerous throughout a large community that is synchronized and repeated on a yearly basis."

Research shows that most Americans are not thrilled with the tax filing process: in a recent Pew report, 56 percent of Americans do not like or even hate doing their taxes. Meanwhile, only a third of Americans expressed positive feelings about doing their taxes (29 percent said they liked it, while 5 percent said they loved it. If you fall into that very intriguging and unusual 5 percent, be sure to check out IHeartTaxes.org for a warm-hearted chuckle). 

In the asset building community, April 15th marks the end of tax season, a time of year when Americans of all income levels reflect on their financial lives and often seek out assistance (both paid and free) with preparing their returns. For families and individuals with low incomes, tax filing may produce the largest single influx of funds all year. Therefore, the timing can be perfect for asset building practitioners to work with families on a variety of savings goals, address concerns about debt, and make sure families are claiming any credits (such as the Earned Income Tax Credit) that they qualify for.

SaveUSA is a program designed to do just that. Started in New York City and now available in other U.S. cities, SaveUSA operates by connecting income-eligible families who file their taxes at Volunteer Income Tax Assistance (VITA) sites with special savings accounts started with a portion of their tax refund. Families who leave the savings untouched for about a year can earn a match. A recent MDRC evaluation of the program found that while 9 percent of the control group (those in the study not offered accounts) in New York and 23 percent of the control group in Tulsa, Oklahoma put some of their refund into savings, about 90 percent of those in the SaveUSA group did so - and 80 percent of those who deposited funds into their SaveUSA accounts were able to maintain the savings for year and received their match. Those are impressive results that speak to a few important ideas: first, despite common myths otherwise, low-income people can and do save. Second, effective support mechanisms for saving can amplify success. The report solidifies a concept that asset building practitioners know quite well: that all Americans can benefit from access to safe, affordable, and versatile ways to save and develop their assets.

However, many Americans lack access to flexible small-dollar savings opportunities. The financial product landscape remains geared toward people who can afford to tie up larger sums in accounts with elaborate design features - not always ideal for lower-income people who are looking for a safe place to store a modest emergency fund or an affordable way to start saving for college or retirement. The Financial Security Credit (as described in the MDRC evaluation) represents one way to address this gap in the savings marketplace. The credit would create more accessible and universal savings opportunities for low-income people during the tax-filing process. As MDRC explains, positive results from the SaveUSA program "will support ongoing efforts to implement similar savings incentives, such as a current policy proposal to embed a 'Financial Security Credit' in the federal tax code." Read more about how this credit would work here.

Finally, while Tax Day is certainly important, April 15th also happens to be the birthday of one of the National Zoo's orangutan's (pictured above). Because Iris was born on April 15, 1987, she was named after the Internal Revenue Service, hence the name: IR[i]S. (Get it?) According to the Zoo, Iris has the distinction of being the first to travel on the "O Line" back in 1995 when it was built. So if you are feeling a little anxious on this Tax Day, just have a look at Iris' laid back approach to life, take a big deep breath, and try to wish a non-stressful Tax Day to America and a happy birthday to Iris!