What’s EITC?

Suppose you are a low-to-moderate income earner who has been employed. In that case, you could qualify for the Federal and California State Earned Income Tax Credits (EITC). A refundable credit, the Federal EITC is available for eligible low-to-moderate income individuals and families and can amount to as much as $6,935. The CalEITC, on the other hand, carries a potential value of up to an additional $3,417. This could mean a significant sum returned to your wallet!

In just the past years alone, nearly 1 million residents of Los Angeles County were recipients of an EITC refund.

Regrettably, it is believed that close to 330,750 individuals did not claim the EITC, leading to an alarming $580 million remaining unclaimed.

This is your hard-earned money we’re talking about! Make sure to reclaim what rightfully belongs to you.

Fundamental Requirements for EITC
Both Federal and Cal EITC have concurrent rules for eligibility.
You may be eligible if:

Eligibility Criteria for Filing
You are not eligible for EITC if you’re married filing separately or if you’re registered as a dependent on someone else’s tax return. However, you may qualify for EITC if your filing status is as follows:

  • Jointly Filed by a Married Couple
  • Head of the Household
  • Qualifying Widow(er)
  • Single

Please note, in case you don’t have children, eligibility for Federal EITC requires you to be aged between 25 and 64 years.

Adhere to Specific Income Limits
The sum of EITC you’re entitled to depends on the number of qualifying children you have and your income level. Typically, the source of income must be employment-based:

  • Whether you are an employee, or
  • Whether you’re self-employed or owning a business.

EITC Information

The Earned Income Tax Credit (EITC) is a tax relief that can provide you with a refund at tax time or reduce the federal taxes you need to pay. This credit is available whether you’re single or married, with or without children. The primary prerequisite is that you must have income from employment. In the current filing season, the Federal EITC can be worth up to $6,935.

Additionally, California offers its own EITC, known as CalEITC. For tax year 2022, CalEITC can be worth up to $3,417.

Both the Federal and State credits have the potential to offset any tax debt you have at tax time. If the EITC amount surpasses your tax liability, you get the surplus returned in your tax refund. So, even without owing income tax, you qualify for a refund if you’re eligible for the credit.

To learn more about the EITC, refer to the Center for Budget Priorities and Policy’s quick facts on EITC:

  1. Economic uplift for working individuals. Both EITC and Child Tax Credit (CTC) have elevated more than 10.6 million working families, including 5.5 million children, above the poverty line in recent years. EITC alone has raised more than 5.6 million individuals, including approximately 3 million children, out of poverty.
  2. EITC benefits for single mothers. The EITC promotes employment. The expansion of this credit in the 1980s and 1990s contributed to over half the surge in employment among single mothers in those decades.
  3. Better early childhood care. Increased EITC refunds lead to superior prenatal care, reduced maternal stress, and signs of improved infant health.
  4. Improved academic performance. Young students from families receiving higher EITC and CTC refunds tend to perform better in school, particularly in math.
  5. Increased graduation rates. Children who received larger EITC amounts in their childhood are more likely to complete high school or a GED.
  6. Greater college enrollment. The larger the EITC a child’s family receives, the greater the likelihood that the child will pursue college education by age 19 or 20.
  7. Enhanced future prospects. Children from families receiving a higher EITC tend to earn more and work longer hours as adults.
  8. Healthier living. Children from families who receive larger EITC and CTC refunds have a lower risk of early disabilities and other poverty-related illnesses.
  9. Short-term financial safety net. Almost half of taxpayers with children sought the EITC at least once during an 18-year period.
  10. Financial assistance for families. Families utilize EITC to afford basic needs, carry out repairs, maintain cars, and invest in education.