Earned Income Tax Credit (EITC)
What is Earned Income Tax Credit (EITC)?
The Earned Income Tax Credit, EITC or EIC, is a benefit for working people with low to moderate income. There are Federal EITC (EITC) and California EITC (Cal EITC). They are both refundable tax credits for people who qualify, but their income limits and benefit amounts are different.
Those who qualify for EITC and/or Cal EITC and claim the credits could pay less tax or even get a tax refund. The qualified amount is based on the earned income in tax year, filing status and number of qualifying children or dependents. People without qualifying children or dependents may also qualify for EITC.
Do I Qualify for EITC?
To qualify for EITC, you must have earned income at least $1 from working for someone or from running or owning a business or farm in the tax year and meet basic requirements. Married taxpayers must file jointly to qualify for this benefit. Even you have no dependent, if you (and your spouse if filing a joint return) meet the basic EITC rules, you may qualify for the EITC.
Most people who qualify for the Federal EITC, also qualify for California EITC (Cal EITC). Find out how much you can get back from EITC and Cal EITC, please use CalEITC4Me Calculator.
How can I claim EITC?
You must file a Federal tax return in order to claim EITC and a State tax return to claim Cal EITC. Even if you do not owe any tax or are not required to file taxes, you must file your tax return and claim EITC in order to ask for a EITC tax refund. Learn more about how to claim EITC, please visit the IRS site .
Get credit going back 3 years
You can still file your tax returns for 2016, 2017 and 2018 to claim EITC if you were eligible. But you must file to claim it! Find out more here.
California Earned Income Tax Credit (Cal EITC)
If you have low income and work, you may qualify for CalEITC. This credit gives you a refund or reduces your tax owed based on your earned income in tax year and number of qualifying child or dependent. Visit CalEITC4Me for more details.
CalEITC has increased the income limits to $30,000 for families, young adults 18-24 and working adults over 65 are now eligible, and self-employed individuals are also eligible for the credit. More Californians will be able to claim this credit than ever before.
What is Young Child Tax Credit (YCTC)?
The Young Child Tax Credit (YCTC) was introduced in tax year 2019. If you qualify for CalEITC and have a child under the age of 6 as of the end of the tax year, you may qualify for up to $1,000 through this credit. Together, these state credits can put hundreds or even thousands of dollars in your pocket.
For more information about YCTC’s eligibility requirements, click here.
Cal EITC And YCTC
Filing your state tax return is required to claim both Cal EITC and YCTC credits. For more specific information about the California Earned Income Tax Credit (Cal EITC) and Young Child Tax Credit (YCTC), visit Cal FTB for more info.
Free Drop-Off Tax Preparation Service
PACE VITA is now offering Free drop-off tax filing service to assist our community with preparing tax returns and prevent face to face tax filing process during the pandemic. Appointment only. For more details, please visit PACE VITA website. You can also schedule your appointment here.
*Service offered until June 30, 2020
You can use Free Self Tax Preparation service to file your tax return by yourself.
Facts of EITC/Cal EITC
It’s Your Money, Get It!
Nationwide during 2019, 25 million people received about $63 billion in EITC. The average amount that the taxpayers received was more than $2,400 to help pay their other expenses. The qualified taxpayers can get tax refund up to $6,557 from the federal EITC. IRS estimates 80% of eligible taxpayers claim and get this important credit.
Cal EITC has returned over $1.1 Billion to low income Californians. This upcoming year alone CA FTB anticipates $1 Billion in claims between Cal EITC and the new Young Child Tax Credit. Very Few people who were likely eligible for the Cal EITC had heard about this tax credit program – only 17%.
CalEITC is a supplemental boost to the Federal Earned Income Tax Credit (EITC). 3.7 million Californians who earn little from their jobs benefited from the CalEITC this past tax season. Cal FTB estimates 400,000 families will qualify for the new Young Child Tax Credit. That means an additional up to $1,000 in the pockets of low earning families with young kids. A family of 3 could see their income double with Cal EITC and new Young Child Tax Credit, together with federal credits.
Research suggests the EITC and Cal EITC credits leads to long-term positive outcomes in health, financial stability, and education for working families. EITC and Cal EITC certainly help improve our local economy.
Read more about the positive impacts of EITC here.
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*For California State’s centralized COVID-19 information, please visit CA.GOV website.