Can administrative data on child support be used to improve the EITC? Evidence from Wisconsin

We examine EITC compliance using a unique dataset combining income tax returns, Unemployment Insurance data, state child support data, and data collected by hand from Wisconsin courthouses. A substantial number of EITC claims are made by adults listed as the court-ordered payor or by adults not identified in child support data. Simple calculations extrapolating Wisconsin's experience to the rest of the country suggest that as much as $1.7 billion of noncompliant EITC claims could possibly be identified. We conclude that the child support case registry can be an effective tool for identifying a subset of inappropriate EITC claims prior to payment.

Duke Scholars

Author V. Joseph Hotz Economics