PERSONAL FINANCE

Who qualifies for the Earned Income Tax Credit (EITC) in California?

To receive a Golden State Stimulus check you must also be eligible for the CalEITC, but what is it and how much is the Californian tax credit worth?

Who qualifies for the Earned Income Tax Credit (EITC) in California?
JUSTIN SULLIVAN AFP

The Californian Franchise Tax Board (FTB) is in the process of distributing a round of $600 stimulus checks to recipients of the California Earned Income Tax Credit (CalEITC). The direct payments are part of the Golden State Stimulus bill that was passed in February by Gov. Gavin Newsom.

The eligibility requirements for the Californian stimulus checks were notably narrower than that of the three rounds of national payments that have been sent during the pandemic.

They were designed to provide immediate relief to vulnerable Californians, and so were largely restricted to CalEITC recipients. But who is eligible for CalEITC relief, and how much is the annual tax credit worth?

Who can receive CalEITC?

The Californian FTB outlines the eligibility requirements for the CalEITC programme on their website, along with a handy EITC Calculator.

Recipients of the support must by at least 18 years old, or have a qualifying child, and have a valid Social Security number or Individual Taxpayer Identification Number (ITIN). They must also live in California for at least half of the year and be able to show proof of having a taxable earned income.

If you satisfy all of these conditions, you must also have a maximum income in the state of California of no more than $30,000 per year.

However you can also claim missing support on the basis of your income level in any year from 2016 onwards. But bear in mind that in the past the maximum income threshold was considerably lower, dropping as low as $6,717 for childless households in 2016. For full information on the requirements from previous years, check out the CTFB’s handy guide.

How much is CalEITC worth?

The CalEITC is not offered in the form of a direct payment, like the Golden State Stimulus checks, but is instead a tax credit which provides either a refund on taxes paid or a deduction on taxes owed. You will have to complete your state tax return before you can receive the credit and the amount on offer differs greatly, depending on your situation.

The maximum amount of tax credit that you may receive can be no greater than the total of your California tax payments for that year. These figures refer to the number of children listed as dependents on your 2020 California tax return.

  • No children - $243
  • One child - $1,626
  • Two children - $2,691
  • Three or more children - $3,027