These tax credits could put thousands of dollars in Californians’ pockets
This tax season, millions of Californians have the opportunity to put more money in their pocket through the California Earned Income Tax Credit.
What is the California Earned Income Tax Credit?
Like its federal counterpart, the California Earned Income Tax Credit is aimed at helping low- and middle-income people out by providing them with extra money on their tax return.
“It’s designed to help people who earn very little from their jobs to provide for their families,” said Alissa Anderson, senior policy analyst for the California Budget and Policy Center.
While the federal credit is decades old, California’s Earned Income Tax Credit was created in 2015, with 2016 being the first year people could claim it on their return.
Who qualifies for the California Earned Income Tax Credit?
There are several criteria for determining who qualifies for the tax credit.
First is income: To qualify for the credit you must be at least 18 years old and make no more than $30,000 a year. This is different from the income requirement for the federal Earned Income Tax Credit, which has its own qualification requirements.
You must also have a social security number.
You may not use the “married/registered domestic partner filing separate” filing status.
In 2019, more than 2 million people claimed the credit, for a total of nearly $395 million in tax credits, according to the website CalEITC4Me, a public-private partnership campaign aimed at promoting the credit.
Recent efforts have sought to expand the tax credit to include undocumented immigrants. However, Gov. Gavin Newsom has so far resisted them.
How much is the California Earned Income Tax Credit?
That largely depends on how much you make and how many children you have. A single person with no children making minimum wage — $12 an hour in California — would collect an estimated $39, according to the state tax calculator, whereas a parent of two children making the same amount would qualify for $159.
The California Earned Income Tax Credit goes up to $2,982.
Parents of small children also can, for the first time, claim the Young Child Tax Credit.
What is the Young Child Tax Credit?
The Young Child Tax Credit was introduced in tax year 2019, meaning 2020 is the first time anyone will be eligible to claim it.
To qualify for the credit, you must have at least one child under age 6. In addition, you must qualify for the California Earned Income Tax Credit, meaning you are at least 18, make $30,000 or less and have a social security number.
The Young Child Tax Credit can net you up to $1,000 extra on your state tax return.
California leads the nation in child poverty, according to the U.S. Census Supplemental Poverty Measure.
Anderson said tax refunds like the California Earned Income Tax Credit and the Young Child Tax Credit are a way to help those children, and not just in the short-term.
Such tax credits may lead to higher birth weights, higher test scores and educational attainment, as well as increased employment and earnings, according to studies cited by the California Budget and Policy Center.
“Yes they provide short term benefits to help families make ends meet, but I think they can also be thought of as resources to invest in our children,” Anderson said.
Who can help with claiming these tax credits?
If you qualify for the California Earned Income Tax Credit, you also qualify for assistance in filing your taxes through the IRS Volunteer Income Tax Assistance program.
VITA assists people making $56,000 or less a year, people with disabilities and people with limited English in preparing their returns.
Few people take advantage of that service, however. Just 2 percent of filers used VITA to file in tax year 2014, according to the California Budget and Policy Center, while most used a paid preparer (65 percent), which can cost hundreds of dollars, or else self-filed (32 percent).
