California’s EITC Program Highlighted This Week

Feb 4 2020 - Posters and Notices - Mike McCluskey

One in four eligible workers do not claim the Earned Income Tax Credit (EITC), leaving over $2 billion in unclaimed credits.
One in four eligible workers do not claim the Earned Income Tax Credit (EITC), leaving over $2 billion in unclaimed credits.

Starting January 31 through February 8, 2020, it’s “California’s Earned Income Tax Credit (CalEITC) Awareness Week,” which shines a spotlight on the program that helps increase California’s workforce participation, according to a recent Governor Gavin Newsom proclamation

The CalEITC was implemented to bolster the federal Earned Income Tax Credit (EITC) program, which has existed for decades; both are designed to help working but struggling, low-to-mid income families with tax credits — especially those families with children.

Benefiting from bipartisan support, California’s program provides additional resources to more than three million working families to help make ends meet.

“Beyond providing a critical immediate boost in family income to address the affordability crisis that too many Californians are experiencing, the tax credit has a substantial impact for the millions of Californians who receive the credit with the potential to set their children —California’s future — up for success,” according to Newsom’s proclamation. “Research shows that the EITC increases workforce participation and wage growth to further grow family incomes, and it has shown to improve the health and educational outcomes of children in families who receive it.”

One reason CalEITC Awareness Week exists is that many lower income workers are not aware of its existence. One in four eligible workers do not claim the credit, leaving over $2 billion in unclaimed credits, according to an OC Register article.

In 2017, California also took a big step towards increasing awareness of the CalETIC program, when it introduced a law requiring employers in the state’s Unemployment Insurance program to provide all their employees with a notice that they may be eligible for the ETIC credit. Employers must provide this notice within one week before or after the annual wage statement (such as a Form W-2 or Form 1099) is provided.

Mike McCluskey, Senior Technical Editor, CalChamber

CalChamber members can download a Earned Income Tax Credit – Employer Required Notification and find out the answer to Does the Earned Income Tax Credit Notice Need to be in Writing?. Not a member? Learn about the benefits of a membership.

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