Last year, $2 billion in state tax credits for working families was left unclaimed in California. The main reason? People weren’t aware they were eligible for them. Had they known, individual families would have received hundreds, even thousands, of dollars that could have gone toward groceries, rent, clothing, and utilities.
Let’s not make the same mistake this year.
It’s up to us to help spread the word about the California Earned Income Tax Credit (CalEITC), which applies to workers who made less than $30,000 in 2020. That includes folks who work full-time at the state minimum wage.
Workers with children under age six can also apply for the Young Child Tax Credit, which pays back up to $1,000 in addition to the CalEITC.
The average family that files taxes and claims these credits, along with the federal EITC, gets
$3,000 back. Some receive more than $8,000 back. That kind of money can make a real difference to families living paycheck to paycheck.
Last year, a single mother who lived in far northern California came into a volunteer tax preparation site for help. She had been able to work just a few months of the previous year and made about $10,000. She hadn’t planned to file, since she made less than the filing requirement—but after she did, she received nearly $8,000 back. The credits almost doubled her income.
In fact, these credits are one of the best programs around for mitigating child poverty, and poverty in general. A 2018 analysis found that federal and state EITCs keep more than 1.1 million Californians from poverty, including 488,000 children. In Santa Clara County specifically, the credits keep 5,700 children from poverty and 2,700 children from deep poverty.
The same analysis found that the main reason people don’t claim the credits is because their earnings are too low to file a tax return, so they aren’t “prompted” to claim them. Ironically, these are the lowest income workers, who likely need the credit the most. That’s why our community must do all it can to encourage workers to file, and let them know free tax filing help is available at www.myfreetaxes.org.
For the first time this year, workers with an ITIN (Individual Taxpayer ID Number)—primarily undocumented workers—are eligible to file for the CalEITC credits, and for free tax help. ITIN filers are treated the same as filers with Social Security Numbers, meaning their information is confidential.
Though ITIN filers aren’t eligible for the federal EITC, they could receive up to $2,982 from the CalEITC and up to $1,000 from the Young Child Tax Credit. Since these filers are newly eligible this year, it’s especially important to reach out to immigrant communities with information.
The need to spread the word is clear. A 2016 statewide survey conducted by the California Budget Policy Center found only 17% of people who are eligible for the CalEITC have heard about the tax credit. And nearly 80% of the households that qualify have children, the state Franchise Tax Board says. You can help with outreach to families by using First 5 Association of California’s toolkit of English and Spanish resources.
With 2020 bringing painful job losses and economic struggle to families, the need for tax credits is direr than ever. Families can file right now—and get their returns back sooner than if they wait a couple months. It’s time to bring all hands on deck, and look out for our neighbors with lower income—many of whom have supported us and risked their health this past year as essential workers. It’s their money; let’s make sure they get it.
Susan Ellenberg is the Chairperson for the FIRST 5 Santa Clara County Commission.
