What's an EITC?
An earned income tax credit (EITC) is an income tax credit designed to put money in the pockets of the working poor. It's a refundable (cash-back) credit, so if the amount of the credit exceeds the size of the household's tax liability, then the household receives a check for the difference.
The federal government (IRS) offers an EITC on federal taxes, and 24 states and the District of Columbia offer an EITC on state taxes as well. For the first time this tax year, California joined those states, calling its state credit CalEITC.
How does it help?
An EITC helps working families get ahead. Studies show that young children in households that receive an EITC do better in school, are more likely to attend college and earn more, brightening the future of the next generation. Struggling families living paycheck to paycheck might use the funds to start a savings account, purchase a used car, catch up on bills, or invest in education.
How did we promote CalEITC?
Santa Barbara County DSS did our part to help promote CalEITC. We announced it on our website, promoted flyers, and announced it on the BSC hold message. The name of the statewide information website (caleitc4me) looks different when read than it sounds when spoken, so we even bought a domain name that matches how it sounds when spoken (caleitcforme) and set it up to redirect automatically, so that people would still arrive at the right site if informed verbally.
How well was CalEITC used in our area?
The state Franchise Tax Board has now compiled data on uptake rates for the new tax credit in each California county. Rates around the state ranged from fewer than 8 claims per 1000 tax returns in Marin County, to over 60 per 1000 in Imperial County. Santa Barbara County had between 15 and 20 CalEITC claims per 1000 tax returns, similar to our neighboring coastal counties.
In all, California’s new earned-income tax credit put about $189 million in the pockets of the working poor as of earlier this month. Proponents had hoped for even more, up to twice as much, but , but uptake may increase as awareness grows in future years. Meanwhile, you can take action to ensure as many of your clients as possible benefit from the credit.
How can I help further?
You can help by letting your clients know about the program and what it can do for them.
- If they haven't filed their taxes, it's not too late. Although April 18 was the regular deadline to file a 2015 tax return, all California taxpayers automatically receive a six-month filing extension until Oct. 17. Up to 55,000 taxpayers may be eligible for the credit but have not claimed it.
- If they filed their taxes but didn't know about the credit, they can amend their state return to claim it. See http://caleitc4me.org/amend-california-tax-return-claim-caleitc/.
- Next tax season, we can renew our efforts to publicize the program with fliers in lobbies, interview areas and cubicles.
See http://www.sacbee.com/site-services/databases/article92493667.html.
