Refund Splitting

To encourage savings, California state income tax forms should be amended to allow households to split their tax refund and direct portions to up to three accounts. The income tax forms would need to be changed to include three "boxes," where tax filers could input account numbers to which they could direct parts of their refunds. Currently, there is only one "box," on the form, allowing tax filers to direct their refund to only one account. New research indicates this simple change can increase personal savings, even for low income people.

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