How Rural Working Families Use the Earned Income Tax Credit: A Mixed Methods Analysis

The Federal Earned Income Tax Credit (EITC) affords cash-strapped and credit-constrained working families the opportunity to increase their purchasing power and savings potential. Mixed methods were used on a sample of 237 rural working mothers who participated in a multi-state study. Approximately two thirds of those eligible claimed the EITC. They stated the tax credit was used to pay bills and loans, improve access to transportation, purchase various consumer durables and nondurables, establish savings and build assets, engage in leisure activities, and make human capital investments. Use of the EITC within the context of the Behavioral Life Cycle Theory, implications for financial practitioners, and suggestions for future research are discussed.