Updated: January 2021
The California Earned Income Tax Credit (CalEITC) is a cash-back (refundable) state tax credit adopted by the Governor and Legislature in 2015 as a way to help low-income working families. CalEITC serves as a supplement to Californians who also qualify for the federal Earned Income Tax Credit (EITC). It is also an anti-poverty tool designed to put tax dollars back into the pockets of Californians earning less than $30,000, regardless of their ability to claim the federal EITC.
You could get up to $3027 more back in this year's tax return if you qualify for CalEITC.
CalEITC is available to more Californians than ever. Starting with the 2020 tax year, households with one or more Individual Tax Identification Number (ITIN) holders now qualify. Those who were self-employed in 2020 may also qualify. If you do not owe taxes, CalEITC will provide you with a tax refund when you file your return. If you owe taxes, CalEITC reduces the amount of taxes you might owe and may allow you a refund when you file your taxes.
In its first year alone, CalEITC boosted the income of about 385,000 families, who shared almost $200 million from the cash-back credit. Over the last 5 years, CalEITC has returned over $2.2 Billion to low-income Californians. This coming year, the California Franchise Tax Board (FTB) anticipates that approximately 4.2 million Californians will be CalEITC eligible, and an estimated $1.2 Billion in this credit will be issued.
In addition, last year our state also established the California Young Child Tax Credit (YCTC) for working parents with children under age 6 who qualify for CalEITC. If you qualify, you may receive up to an additional $1,000 per child under age 6.
Claiming CalEITC and YCTC is easy. Eligible taxpayers just need to file a state tax return.
Eligible workers may claim the credit if they file as single, head of household, or married filing jointly. Working families without dependents can still claim the credit if they are age 18 and over, have lived in California at least half of the year, and if the filer, qualifying spouse and children (if applicable) have valid social security numbers or Individual Taxpayer Identification Numbers (ITINs). Self-employed workers with 1099 forms and cash earnings also qualify.
As a result of the CalEITC expansion, taxpayers filing in 2021 with Social Security Numbers including cards that state: “Not Eligible for Work” as well as immigrants filing with an Individual Taxpayer Identification Number may benefit from the CalEITC credit if working and make $30,000 or less.
Prior to 2020, many people who worked were excluded from the CalEITC and Young Child Tax Credit because they or someone from their household filed with an Individual Taxpayer Identification Number (ITIN). Starting in 2021, taxpayers with ITINs will now be able to claim the CalEITC and Young Child Tax Credit regardless of whether they file their taxes with a Social Security Number of ITIN.
It is estimated that nearly half of the California tax filers who filed last year with an ITIN will now be able to claim these state tax credits.
Basic Facts About ITINs
- An Individual Tax Identification Numbers (ITINs) is a tax processing number available to certain immigrants who cannot get a Social Security Number (SSN).
- ITINs are issued by the Internal Revenue Service (IRS). The IRS issues ITINs regardless of immigration status.
- ITINs allow individuals ineligible for an SSN to do things like:
- Report earnings to IRS for tax purposes
- Open bank accounts with certain banks
- Conduct business in the U.S.
Who qualifies for an ITIN?
ITINs are issued by the IRS regardless of immigration status and for tax or business purposes. In order to be eligible for an ITIN must be eligible to pay or receive a refund of U.S. federal taxes and doesn’t qualify for a Social Security Number when filing a US tax return, or be the dependent or spouse of the taxpayer and not be eligible for a Social Security Number when filing a U.S. tax return.
Do ITINs need to be renewed?
Yes. ITINs that have not been used on a tax return for tax years 2017, 2018 or 2019 will expire December 31, 2020. Additionally, ITINs with middle digits 88 (For example: 9NN-88-NNNN) will expire December 31, 2020. Those with middle digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, that were assigned before 2013 and have not already been renewed, will also expire at the end of this year.
ITINs with middle digits 83 through 87 expired last year. Middle digits 73 through 77, 81 and 82 expired in 2018. Middle digits 70, 71, 72, and 80 expired in 2017, and 78 and 79 expired in 2016. Taxpayers with these ITIN numbers who expect to have a filing requirement in 2021 can renew at any time.
How do I apply or renew an ITIN?
You can apply or renew an ITIN by filing your taxes by following these steps:
- Completing the W-7 form (ITIN application) with original documents or it will need to be prepared by either an Acceptance Agent that has gone through training and certification or an IRS agent who is able to approve the authenticity of the documents.
- This packet needs to be mailed to Texas where the IRS has their central processing unit for ITIN applications and renewals. The quickest that this usually takes to process is 10 weeks. Sometimes it can take several months before you get a response. It is important to make sure that everything was completed correctly, that you send the right documents, that they are unexpired, and that you sign and date the tax form as well as the ITIN application form as those are the most common reasons for a delay.
Following Up: The Acceptance Agent has a direct phone number to be able to check on the status of your application or renewal. You can also call to check about it: 1-800-908-9982
What documents do I need to renew/apply for an ITIN?
Passports are generally the best document to use for both the taxpayer and spouse. However, the IRS no longer accepts passports that do not have a date of entry into the U.S. as a stand-alone identification document for dependents from a country other than Canada or Mexico or dependents of military members overseas. The dependent’s passport must have a date of entry stamp--otherwise the following additional documents to prove U.S. residency are required:
- U.S. medical records for dependents under 6
- U.S. school records for dependents under 18 and
- U.S. school records, rental statements, bank statements or utility bills listing the applicant’s name and U.S. address, if 18 years of age or older.
- Rental Statement listing the Applicant’s Name and U.S. Address
- Utility Bill listing the Applicant’s Name and U.S. Address
- Bank Statement with Applicant’s Name and U.S. Address
Other eligible documents include:
- National identification card (must show photo, name, current address, date of birth, and expiration date)
- U.S. driver's license
- Civil birth certificate (required for dependents under 18 years of age)
- Foreign driver's license
- U.S. state identification card
- Foreign voter's registration card
- U.S. military identification card
- Foreign military identification card
- U.S. Citizenship and Immigration Services (USCIS) photo identification
These are the only 13 documents that are used for applying for an ITIN. The documents must also show your name and photograph, and support your claim of foreign status. The documents must also not be expired.
How do I avoid scams?
Ideally, whenever possible we recommend filing with a free tax preparer at a Certified Acceptance Agent (CAA) Volunteer Income Tax Assistance (VITA) site. These volunteers have strict requirements and have to annually train and pass certification tests with the Internal Revenue Service (IRS).
If there isn’t a nearby free tax site to you, then we recommend that you use this list of resources to find a paid preparer: https://www.irs.gov/individuals/international-taxpayers/acceptance-agents-california
These paid tax preparers have also gone through additional training and certification to allow them to review documents so that you can send a certified copy rather than the original.
Also note: some IRS Taxpayer Assistance Centers are also able to provide this service free of charge if your taxes and W-7 (ITIN application) have been completed at another tax preparer.
Free assistance is available for low-income and middle class Californians. Please review this document to see if you qualify. The California Franchise Tax Board (FTB) offers a free tax preparation site locator. The Internal Revenue Service (IRS) also offers a free tax preparation site locator.
Volunteer Income Tax Assistance (VITA) and Tax-Aide are IRS-sponsored programs that provide free tax preparation for those who qualify. These programs prioritize accuracy. Free tax preparation programs have an accuracy rate of over 90 percent, the highest in the industry. The annual training that VITA and Tax-Aide volunteers undergo helps prevent the IRS from performing additional verification and reduces the time taxpayers spend to get tax filing mistakes corrected.
Tax-Aide is sometimes referred to as Tax Counseling for the Elderly or TCE. This program, frequently run through the AARP, primarily serves seniors, although, there is no age requirement to get tax help. VITA offers free tax preparation for workers regardless of age.
Unfortunately, due to COVID-19, many VITA sites are closed for in-person services. Some may offer drop-off or virtual tax services to continue assisting people with safe tax preparation. Please contact your local VITA program to see what services they provide.
With drop-off service, you’ll be able to drop off your tax documents and any pre-filled forms at a secure location. Then, an IRS-certified VITA volunteer will work on your tax return. You will be contacted to return to the VITA site to review and sign your tax return after it has been prepared. It will then be submitted to the IRS.
With virtual tax service, you will submit your tax documents online. An IRS-certified VITA volunteer will review your documents and contact you to obtain additional information to complete your tax return. Your tax return will be sent back to you for review before it is filed electronically with the IRS.
With both services, the process will depend on the location, so contact your local VITA site for more information.
VITA and Tax-Aide can also help you access other tax benefits, such as the Saver’s Credit, and connect you with other financial resources, such as CalSavers.
Code for America, in partnership with VITA, has created a fully virtual intake process for free tax assistance. In light of COVID-19, Code for America’s Get Your Refund service is a free and safe alternative to prepare your tax return without the risk of in-person interaction.
Visit Get Your Refund to connect with an IRS-certified volunteer who will help you file your taxes. First, you will upload your tax documents online. Then, an IRS-certified volunteer will contact you to discuss, prepare, and review your tax return for filing.
Code for America’s Get Your Refund service is free for those who earn less than about $66,000. This is a good option if you are comfortable using technology, including sending pictures or documents electronically.
Online free tax preparation offers a convenient and reliable way to file your taxes.
If you’re comfortable using computers and confident preparing your own taxes, consider using free online tax software.
Free File Alliance, is a suite of programs in partnership with IRS. You can find Free File programs on the IRS website. If you choose to use one of these programs, read the fine print carefully. Each program has slightly different criteria for their software. In addition, some companies offer free state tax returns, while others don’t.
If you don’t feel comfortable using tax software or just want live support, free in-person or virtual tax preparation is your best option. You may be able to find tax support from your local free tax site or Code for America’s Get Your Refund service.
If you feel comfortable filing your taxes with minimal support, free online filing services from the Free File Alliance may provide what you need.
If you make more money than the income limits for certain free tax filing programs, you can find a paid tax preparer or paid tax software.
If you prefer in-person paid assistance, make sure to research your options first. Unfortunately, the tax industry is not regulated, so be careful when looking for assistance. Although many paid preparers are honest, some preparers take advantage of their clients by not disclosing their fees or offering refund anticipation products.