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Get The 411 on Earned Income Tax Credit

In checking with the California Franchise Tax Board, They tell us that last year; California began offering its own earned tax income credit to many people who make use of the federal EITC. The CalEITC is refundable, meaning that taxpayers will receive money if the credit is greater than taxes owed. This credit was designed to put money BACK into the pockets of qualifying Californian. If you are eligible all you need to do is file a tax return.

Here is the qualification information from the ftx.ca.gov:

Qualification and Description

Eligible sources of earned income from:

  • W-2 wages.
  • Salaries, tips.
  • Other employee compensation subject to California withholding.

 

Note: For Cal EITC, earned income does not include income from self-employment.

Both your adjusted gross income and earned income (defined above) may be up to:

Maximum Income Limit

  • $6,717 if there are no qualifying children.
  • $10,087 if there is one qualifying child.
  • $14,161 if there are two or more qualifying children.

Your investment income, such as interest, dividends, royalties, and capital gains cannot exceed $3,471 for the entire tax year.

You may file as:

Filing Status

  • Single.
  • Married/Registered Domestic Partner (RDP) filing jointly.
  • Head of Household (HOH).

Note: Married/RDP Filing separately status may not be used.

Your qualifying child must meet three criteria:

  • Relationship – Is the taxpayer’s child, stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of any of them.
  • Residence – Had the same principal residence as the taxpayer in California for more than half the tax year. Certain exceptions apply.
  • Age – Child must be younger than the taxpayer and either a) under the age of 19 at the end of the tax year, or b) under the age of 24 if a full-time student for at least five months of the year. A permanently and totally disabled child may be included at any age.

 

The child only qualifies for one return.  If the child can be claimed by more than one taxpayer, the child’s qualification goes to:

  • The parent.
  • If more than 1 taxpayer is the child’s parent, the parent with whom the child lived for the longest time during the year, or if the time was equal, the parent with the highest adjusted gross income (AGI).
  • If no eligible parent claims the child, the individual claiming the child, if the individual’s AGI exceeds the AGI of any parent eligible to claim the child.
  • If no taxpayer is the child’s parent, the taxpayer with the highest AGI.

Residency

Your principal residence must be in California for more than half the tax year.

Age

If you do not have a qualifying child, you (or your spouse if you file a joint return) must be between 25 and 65 years old at the end of the tax year.

For more info go to www.ftb.ca.gov

Visit our Tax Tips site

(BBB news release)

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