Do Doubled-Up Families Minimize Household-Level Tax Burden?

Maggie R. Jones and Amy B. O’Hara

National Tax Journal, 2016, vol. 69, issue 3, 613-640

Abstract: This paper examines households with children and at least two related tax filers to determine whether the household lowers income tax liability by optimally reassigning dependents among filers. Using a simulation strategy, we examine the dependent claiming that leads to the lowest income tax liability for a household, and ask whether multifamily households claim optimally. We find that taxpayers in multifamily households reassign dependents to filers as the payoff to doing so — in terms of either tax minimization or EITC benefit — increases; and that the propensity to reassign dependents is greater for EITC-eligible filers.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:69:y:2016:i:3:p:613-640

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