Splitting Refunds

Given the size and scope of tax refunds issued by the federal government each year, the tax filing process is a logical place to support and encourage savings behavior. In fact, the forms that IRS prepares for taxpayers are a nexus where individual behavior and institutional structures coincides. Allowing taxpayers to split their tax refunds directly on their tax returns will encourage increased household savings by making it easier for taxpayers to divide their refund between “money to save” and “money to spend.” A simple one-step approach, with the advantages of direct deposit, is a proven, safe, and fast way to save.

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Reid Cramer is director of the Millennials Initiative at New America. Previously, he served as the Asset Building program's research director and as a co-director of New America's Next Social Contract Initiative.