Information, Beliefs, and Filing-Method Choice of Low-Income Taxpayers

Many Earned Income Tax Credit (EITC) claimants pay for tax preparation services they could obtain free and more accurately through VITA (Volunteer Income Tax Assistance). In Michigan, only 1.4% of EITC returns use VITA while 49% use paid preparers, who often face no competency standards. This study uses a field experiment to understand why low-income households choose paid preparers despite higher costs and error rates, and to test whether targeted information about VITA’s availability, quality, and convenience shifts behavior. The project quantifies the economic cost of paid preparation—estimates suggest claimants spend about 20% of their EITC on fees—and evaluates whether simple outreach can increase take-up of free, higher-quality filing options.