Beyond Nuclear Families: Unraveling Tax Policy Challenges for Multigenerational Families

Background and Purpose:Family-centric economic mobility social policies can reduce the experience of child poverty. The federal government spends approximately $200 billion annually through a patchwork of tax and transfer programs, substantially reducing the child poverty rate. Still, most social policies overlooked the ways in which large and extended families prioritize financial and physical caregiving. In the U.S., differences in family structure, family resources, and family size are linked to trends in social and economic inequality and children residing in extended family households are at higher risk of experiencing poverty during their childhood compared to two-parent nuclear family households. How families as multigenerational networks navigate their individual roles, behavior, and identity within the broader socio-political and economic context are important concepts to examine how economic advantage and disadvantage may accumulate within one’s lifetime and become transmitted across generations.

In this study, we examine how large and extended families experience and navigate tax-based poverty reduction programs, specifically the Child Tax Credit (CTC) and the Earned Income Tax (EITC). This paper draws on interview and focus group data to understand the unique challenges of multigenerational, very low-income, immigrant, and non-nuclear families towards navigating the federal tax system and fully benefiting from the CTC and EITC.

Methods: This analysis draws on data from 33 interviews with parents/caregivers, 4 interviews with community stakeholders and focus group data from 5 CTC-eligible parents/caregivers, 6 outreach workers, and 3 tax preparers. We recruited participants through direct contact, digital and listserv advertisements, referrals, and recruitment flyers and emails sent by community partners. We followed the “sort and sift, think and shift” data analysis method as it allows for a flexible analysis approach that integrates deductive and inductive processes of analysis, well suited for applied research.

Results: Interview and focus group data suggest four emergent explanations for differences in receiving the CTC and the EITC 1) grandparents’ concerns over claiming a child on their taxes out of fear of a tax audit; 2) the lack of knowledge that someone else in the household received the tax benefit; 3) familial preferences for mothers to claim their children on their tax returns; and 4) experiences of extreme hardship that result in parents not obtaining the CTC.

Conclusions and Implications: U.S. tax policies aimed at addressing economic hardship and enhancing family and child well-being use differential ideologies of family structure and functioning that prioritize nuclear families, overlooking families defined by strong multigenerational ties. Given the increase in extended family households and the higher prevalence of such large and extended family living arrangements among low-income and racial/ethnic minoritized families, more research is necessary to understand how these families experience and navigate social policies such as the CTC and EITC. This study adds to the social policy literature by centralizing the experiences of large and extended families in utilizing tax-based social policy and illuminating the challenges and barriers these families encounter when navigating federal social policies.