California officials and nonprofit groups want to encourage poverty-level workers to take advantage of the state’s earned income tax credit, which put an average of $519 in the pockets of people who received it in the 2015 tax year.
The biggest challenge, supporters say, is getting eligible workers who file a tax return to claim the credit, as well as encouraging workers who don’t file a return to do so and take advantage of the program.
“This important policy only works if people know about it and apply for it,” Nancy McFadden, a top aide to Gov. Jerry Brown, said Wednesday during a conference call to launch “Earned Income Tax Credit Awareness Week.”
Created as part of the 2015-16 budget package, the credit program paid out almost $200 million to more than 385,000 taxpayers for the 2015 tax year. So far for the 2016 tax year, almost $65 million in credits has been issued to 106,338 filers, an average of $611. Brown’s 2017-18 proposed budget expects $264 million in credits claimed.
Yet those amounts are well below the $380 million in state credits that officials projected when they launched the program as an anti-poverty counterpart to the longstanding federal earned income tax credit. Officials estimate that California residents collectively miss out on $2 billion in combined federal and state earned income tax credits annually.
FOR THE 2016 TAX YEAR, INCOME LIMITS FOR THE STATE EARNED INCOME TAX CREDIT ARE: $6,717 (NO CHILDREN), $10,087 (ONE CHILD), $14,161 (TWO OR MORE CHILDREN.) INVESTMENT INCOME CANNOT EXCEED $3,471 FOR THE YEAR.
Tech entrepreneur Joseph N. Sanberg, who leads the CalEITC4Me campaign, said the state credit can be the difference between a family getting two meals a day or three. He announced a new phone number – 760-970-8396 – to which people can text “money,” “cash” or “dinero” and receive assistance with the program.
Advocates for the poor, as well as some elected officials, have said California could increase participation in the tax credit program if Brown and lawmakers followed the lead of the federal government and several states and expanded it by allowing self-employment income or raising the income thresholds, or both.
Assemblyman Marc Steinorth, R-Rancho Cucamonga, has introduced legislation, AB 75, to expand the state’s credit to self-reported income. And AB 225 by Assemblywoman Anna Caballero, D-Salinas, would raise the credit’s income thresholds.
State Sen. Jim Beall, D-San Jose, said such an expansion wouldn’t be wise because of an uncertain state budget outlook. Participation in the existing credit program should continue to climb, officials said, perhaps someday exceeding the $380 million talked about in 2015.
For the 2016 tax year, taxpayers are eligible for a credit if they make less than $6,717 (no children), $10,087 (one child), or $14,161 (two or more children). Investment income cannot exceed $3,471 for the year.