Can Administrative Data on Child Support Be Used to Improve the EITC? Evidence from Wisconsin

PWP-CCPR-2005-054

Abstract

We use a unique dataset containing federal individual income tax returns, Unemployment Insurance data, state child support data, and data collected by hand from Wisconsin courthouses to examine EITC compliance and participation. A substantial number of claims are made by adults listed as the court- ordered payor, or are made by adults not identified in the state case registry. Simple calculations extrapolating Wisconsin’s experience to the rest of the country suggests that as much as $1.5 billion of noncompliant EITC claims could possibly be identified, though there are several reasons to regard this as an upper bound. We also find that 40 percent of child support recipients who appear entitled to the credit may not be receiving it.