Given that Texas/America Saves Week is approaching, we are devoting this post to tax-time savings, highlighting projects taking place around the state that are incentivizing filers to save a portion of their tax refund.
Promoting saving at tax time is increasingly seen as an important asset building opportunity. For many working families, tax refunds may be the largest lump sum of money they receive all year. Additionally, people now can save directly on their tax return, either by splitting their refund between a checking and savings account or by purchasing Series I U.S. Savings Bonds, making tax-time saving easier and more automatic.
Series I U.S. Savings Bonds are a good savings product option for VITA clients for a few reasons:
- Filers don’t need a bank account to purchase them.
- They can be purchased for as little as $50.
- They are a competitive saving product, currently paying an interest rate of 3.1%.
- They can be purchased in someone else’s name; and
- They are exempt from Texas’ asset tests for public benefits for one year from date of purchase.
A general savings account is another good savings product option for VITA clients. If a filer is building emergency savings, a savings account may be preferential because funds in a savings account are more accessible than a U.S. Savings Bond, which must be held for a year before it can be redeemed.
There has been a lot of growth in the number of Texas VITA sites promoting saving to their clients, and in turn, in the number of filers savings at VITA sites. During the 2011 tax season, 31% of Texas VITA sites served any clients that submitted Form 8888 to purchase Savings Bonds or split their tax refund on the tax form, compared to 15% in 2010. During the 2010 tax season, no Texas VITA sites offered incentives for filers to save a portion of their tax refund. This tax season, we know of 14 local projects that are incentivizing VITA clients to save a portion of their tax refund, which we’ve listed below. The first group is incentivizing clients to save their refund in a savings account while the second group is incentivizing filers to purchase U.S. Savings Bonds with their tax refund.
Projects Incentivizing Filers to Save Their Refund in a Savings Account
VITA sites throughout Galveston County are offering eligible filers the chance to open a SaveUSA account. Eligible filers who open this account will receive a 50% match of $100 when they save at least $200 of their tax refund for a full year and take an online Balance Financial Fitness Money Management course. The Coastal Community Federal Credit Union opens the SaveUSA accounts, is helping sponsor the program, and operates four of Galveston County’s seven VITA sites. Coastal Community Federal Credit Union also opens accounts with the direct deposit of a tax refund with no initial deposit or minimum balance and makes the initial $5 deposit into the client’s account for credit union membership.
United Way of Greater Houston’s THRIVE campaign is incentivizing tax-time savings through a new project modeled after the SaveUSA program. Their Tax-time Matched Savings Program offers Neighborhood Tax Center clients who visit the Baker-Ripley Center in Gulfton or Memorial Assistance Ministries in Spring Branch the opportunity to open a savings account with Neighborhood Centers’ Promise Credit Union. If the client agrees to deposit $100-$500 of their tax refund into the account and maintains their original deposit amount in the account until January 15, 2013, they will receive a 50% match on their deposit.
San Antonio was one of four cities selected nationally to replicate the SaveUSA program with support from the New York City Mayor’s Fund. Their SaveUSA program, run by the United Way of San Antonio and Bexar County, offers clients at four San Antonio VITA sites a 50% match, up to $500, if they deposit at least $200 of their tax refund into a SaveUSA Account and maintain the initial deposit for approximately one year. The following four San Antonio VITA sites are offering the SaveUSA account: ACTN/Claude Black Center, Guadalupe Community Center, The Neighborhood Place, and YWCA. Select Employees Federal Credit Union and Citibank Las Palmas branch office are providing the SaveUSA accounts. The United Way of San Antonio is also incentivizing U.S. Savings Bond Purchase at some of its VITA sites that are not offering the SaveUSA account.
The United Way of Tarrant County launched a new savings campaign at its VITA sites this tax season to encourage filers to build $500 in emergency savings. Eligible filers that save a portion of their tax refund can receive up to $100 in cash incentives deposited into their account in $25 increments if they meet certain milestones. VITA clients that save a portion of their tax refund by splitting their tax return will receive an initial $25 incentive deposit into their account. If the client attends either a financial education class or financial coaching session, she will receive an additional $25 incentive. After saving $100 in the account, the filer will receive another $25 incentive and after six months, if the client still has the account open, she will receive the final $25 incentive deposit. The United Way of Tarrant County is also incentivizing U.S. Savings Bond purchase at its VITA sites.
Projects Incentivizing U.S. Savings Bond Purchase
OpportunityTexas, through our Innovation and Investment Fund, granted funds to the United Ways of Texas and Foundation Communities in Austin to support tax-time savings incentive projects. United Ways of Texas subgranted their funds to the following 11 local United Ways that either operate or support VITA sites in their communities: Southern Cameron County, Coastal Bend, Longview, Lubbock Area, Midland, Tarrant County, Mid and South Jefferson County, Metropolitan Dallas, San Antonio, North Texas (Wichita Falls), and Central Texas (Temple). VITA sites operated or supported by local United Ways are giving a $25 gift card to clients that receive at least a $500 tax refund and purchase $100 in Savings Bonds on the tax form. To learn more about their projects, see the article in United Way Worldwide's recent newsletter about them. Foundation Communities is giving a $25 gift card to filers at all of their Austin VITA sites that purchase $50 in Savings Bonds with their refund. The City of Austin recently announced a $20,000 matching grant to our grant to Foundation Communities to expand their project.
OpportunityTexas is committed to increasing the number of savers at Texas VITA sites, hoping to see a larger and larger share of Texans save a portion of their refund. If you live in a community operating a tax-time savings project, please help spread the word about it and consider helping sponsor it next year! If you live in a community without a project this year, consider starting one next year!