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Tax relief for working families

Posted: February 26th, 2016 | Featured, Features, News | No Comments

New state program gives extra cash to most vulnerable

By Jeff Clemetson | Editor

“Good news” and “tax season” are phrases that are rarely seen together, but a new statewide program really is good news for low-income workers this tax season.

The California Earned Income Tax Credit (CalEITC) initiative is a cash-back tax credit that is new this year. The program was designed to complement the impact of the federal EITC by giving an additional check to the most vulnerable low-income workers.

“Adding the new California EITC is a tremendous opportunity for hard-working Californians to keep more of the money that they earn and help them to take care of their families,” said state Assembly Speaker Toni Atkins in a press release. Atkins was instrumental in getting the CalEITC added to the 2015-16 budget.

Assembly Speaker Toni Atkins was instrumental in getting funding for CalEITC. (Courtesy of CalEITC4Me Campaign)

Assembly Speaker Toni Atkins was instrumental in getting funding for CalEITC. (Courtesy of CalEITC4Me Campaign)

To qualify for CalEITC funds, you must be an individual with zero dependents who earned less than $6,850 last year; or a household with one dependent who earned less than $9,880; or a household with two or more dependents who earned less than $13,870.

Also, all filers must be over the age of 25 to qualify, unless they have dependents. The maximum refund a family can receive is $2,653 but the average refund will be around $900.

Families that are eligible for CalEITC are also eligible for federal EITC benefits, which have a higher income threshold to qualify. Individuals with zero dependents that earned less than $14,820 and households with three or more children that earned less than $53,267 qualify for federal EITC money.

Many of California’s working families are eligible for both state and federal EITC benefits. However, being eligible doesn’t mean a person will automatically receive a check. Workers must file their tax returns to collect –– and that doesn’t always happen.

According to studies by the Tax Policy Center and IRS, eligible workers with no children are less likely to file for EITC money than those with children.

“This could reflect the fact that these workers are eligible for relatively small credits,” said Alissa Anderson, senior policy analyst at the California Budget & Policy Center. “Participation rates are also thought to be lower among workers who are eligible for smaller credits just in general, regardless of how many qualifying dependents they have; which again suggests that some people may not think it’s worth it to file taxes and claim the credit if they are eligible for only a small credit.”

Studies also show that people with incomes so low that they aren’t required to file a tax return also do not participate in EITC programs.

CalEITC_Eligibility_Infographic

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“It could be that non-filers are not aware that they can receive a refund even if they don’t owe personal income taxes or they may not think it’s worth the time and effort to file, particularly if they are eligible for only a small credit,” Anderson said.

Historically, California is ranked among the lowest in filing for the federal EITC, leaving $1.8 billion on the table that otherwise would have been available to those who need it the most. Now with nearly $400 million available through the CalEITC, an estimated $2.3 billion is available for Californians between both the state and federal programs.

A joint public and private information campaign called CalEITC4Me is underway “to keep these much-needed dollars with the people who earned them,” according to a statement released by the campaign. CalEITC4Me estimates that between the federal and state EITC refunds, it is possible for some households to receive up to $6,000 this year. To estimate your potential earned credit, use the CalEITC4Me calculator at caleitc4me.com/get-it/.

“This tax season, nearly $600 million is available between the state and federal EITCs for San Diego’s working families,” said Assemblymember Shirley Weber in a press release. “That’s an estimated 50,000 filers who are eligible for CalEITC in San Diego County, benefiting up to 120,000 people.”

The majority of those who are eligible are “part-time, working single mothers,” said Holly Martinez, a spokesperson for CalEITC4Me campaign.

The campaign also researched other demographics of potential candidates for CalEITC help. Of households with incomes under $15,000 in targeted zip codes, 39 percent are Latino; 17 percent are African-American; and 11 percent are Asian. Only 16 percent of households are married and 48 percent are single without children; 35 percent have at least one child. Fifty-eight percent of people who make less than $15,000 are women. Ninety-one percent worked less than full-time. One in six moved in the last year and more than three-quarters are renters.

In La Mesa, approximately 800 to 1,000 tax filers are estimated to be eligible for the CalEITC, according to research by the CalEITC Campaign. For the federal EITC, an estimated 4,600 filers are eligible, or roughly 15 percent of La Mesa’s population. For a more detailed examination of where potential EITC filers live, visit the CalEITC Campaign’s heat map at caleitc4me.org/caleitc-heatmap/.

For low- to moderate-income individuals or families who cannot prepare their own tax returns, the Volunteer Income Tax Assistance (VITA) program offers free tax help from qualified tax professionals.

“Sixty percent of Californians who were eligible for free tax assistance ended up paying to file their taxes at an average of cost of $200,” Martinez said. “That’s money families could have for food, transportation and other every day needs.”

According to the IRS, VITA generally helps people who make less than $53,000 annually, people with disabilities, the elderly, and people with limited English. All volunteers are IRS-certified and provide basic income tax preparation and help with electronic filing.

For a complete list of VITA requirements and information on what to bring to your appointment, visit San Diego 211 at bit.ly/1QCjvIF. For a list of VITA locations in San Diego County, use the Tax Prep Finder Tool at caleitc4me.org/get-it/.

–Write to Jeff Clemetson at jeff@sdcnn.com.

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