How CA Latinos Can Benefit from the Earned Income Tax Credit

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The California Earned Income Tax Credit was designed to provide tax relief to low- and middle-income filers to help prevent and lift them out of poverty. AP FILE PICTURE

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As inflation hits an all-time high and everyday expenses such as gas and food prices rise, a tax refund could provide a significant financial boost to many low-income families across the country. central valley who live paycheck to paycheck. A state tax credit, which was recently extended to undocumented workers, could help provide some relief.

The California Earned Income Tax Credit was designed to provide tax relief to low- and middle-income filers to help prevent and lift them out of poverty. This is especially critical now, as many families have struggled financially during the pandemic. But until recently, the credit was only available to legally authorized workers with a Social Security number, excluding the state’s more than 2 million undocumented residents.

“Many undocumented immigrants had to pay taxes, so they contributed to the economy, but they weren’t getting anything back,” said Clarissa Vivian Petrucci, special project coordinator at the Central Valley Immigrant Integration Collaborative, an organization of defense of immigrant rights. . “This credit is very important to our community, especially here in the valley, because we have a lot of people – especially farm workers – who work hard but still live in poverty.”

For years, undocumented residents who filed their taxes with an Individual Tax Identification Number, or ITIN, have been denied access to this tax refund because of their immigration status. The Internal Revenue Service issues an ITIN to filers who are not eligible to receive a Social Security number, including undocumented immigrants, foreign nationals, and certain visa holders.

That changed in 2020 when Governor Gavin Newsom signed AB 1876which expanded the tax credit to include all income-eligible immigrants in an effort to help more Californians with the cost of food, rent and other basic necessities. California is now the second state, after Colorado, to extend the credit to undocumented immigrants.

But many workers don’t know they are eligible and leave a lot of money on the table. It’s a problem that prevents hundreds of thousands of families – especially Latinos – from receiving the much-needed funds to which they are entitled, said Eduardo Garcia, senior policy officer at the Latino Community Foundation, an advocacy organization that conducts education and awareness activities. regarding the tax credit.

“We are working to provide education for members of the Latino community to claim these dollars, as this is critical credit that can give them a much-needed boost,” he said. “All families should have equal access to this tax credit so they can get through these tough economic times.

On $76 million in tax credits are unclaimed by eligible filers each year and Latinos make up about half of those who do not claim those dollars, according to a July 2021 report from UC Berkeley’s California Policy Lab. The researchers analyzed the number of eligible residents who received the credit based on the group of people already enrolled in CalFresh, the state’s food stamp program. Of those 948,207 CalFresh recipients who were eligible for the credit, about 53% claimed the credit, according to the report.

Undocumented Immigrants Can Claim California Tax Credit

The earned income tax credit works by reducing the amount of tax a filer owes or increasing a tax refund. If a filer’s tax credit amount is more than they owe in taxes, they can receive the money in their tax refund. Those who qualify for the credit can still receive a refund even if they do not owe income tax.

To qualify, a worker must be at least 18 years old, have a maximum income of $30,000 if single, and have a Social Security number or ITIN for themselves, spouse, and child. Additionally, a worker must also live in the state for more than six months, among other requirements.

The amount of money a filer receives depends on income and family size, but can range from hundreds to thousands of dollars. A worker earning less than $30,000 can receive up to $255, while those with children or dependents can receive more. A filer with one child, for example, can receive up to $1,698.

A person who has children born in the United States has an added incentive to apply for the program. If their child has a Social Security number, a filer could receive up to $3,600 per child for children under age 6 and $3,000 for children ages 6 to 17, depending on the California Franchise Tax Commissionthe state body that manages the credit.

Some workers with children may also qualify for an additional tax credit, said Petrucci of the Central Valley Immigrant Integration Collaborative. Workers who qualify for the state earned income tax credit and who have a child under age 6 could get up to $1,000 through the Tax credit for young children. U.S. Citizenship and Immigration Services do not consider these tax credits to be public benefits, she added.

Octavio Aguierre is a Fresno resident and immigrant from Michoacan, Mexico who has lived in California for 34 years. Aguierre owns a small food truck where he sells tacos, burritos, quesadillas and other regional dishes.

The pandemic has been particularly difficult for him and his family, he said. Aguierre, who is the family’s main provider, contracted COVID-19 last August and had to stop working. He lost 20 pounds after experiencing severe and debilitating symptoms including difficulty breathing, fever and shortness of breath, which left him bedridden for a month and a half.

“Honestly, I thought I was going to die, but thank God I’m alive,” he said in Spanish. “I got very, very sick. The virus has changed me, I am no longer the same person.

Because he is undocumented, he was ineligible for many of the social safety net programs that have kept many Americans afloat during the pandemic, including unemployment insurance, stimulus checks or other federal benefits.

Since returning to work, Aguierre said inflation has hurt his small business. Several costs for ingredients and packaging items such as paper, take-out boxes and disposable utensils have increased significantly.

He supports the state’s expansion of the earned income tax credit, which he plans to claim this year for the first time when filing his taxes. He said the credit could help him recover financially as he works to get his business back on track.

“It could be a big help to us,” he said. “Things have been tough lately, but we’re just trying to keep moving forward and do our best to get through this period.”

How to Claim California Tax Credit

Sasha Feldstein, director of economic policy at the California Immigrant Policy Center, an advocacy organization that has pushed for the expansion of the earned income tax credit, said there are several barriers that still prevent many undocumented residents to claim their tax credits.

Some undocumented workers still do not have an ITIN, which is needed to apply for the credit. Additionally, navigating the tax filing process can be difficult for new filers. Many paid tax preparers also charge high rates for their services, which could “outweigh any credit benefits” a person is entitled to, she said.

“It’s a huge problem that we have to solve eventually,” she said. “We really want to encourage people to file their taxes for free if they can. It is also very important for people to know where to access resources for assistance in obtaining an ITIN in the first place.

The deadline for filing a tax credit with a tax return is April 18. Still, many eligible workers can apply retroactively to receive the credit from previous years. A filer can claim the tax credit for up to four years by filing or amending a state tax return.

Eligible workers interested in claiming the tax credit can download the California Earned Income Tax Credit form here, on the California Franchise Tax Board website. It must be completed and included when filing a tax return. Instructions on how to submit the form with a tax return can be found here.

There are different ways for a resident to submit and request assistance on how to file a tax return. California residents can file their tax return and claim the state tax credit using CalFileComment free. Those who qualify for the credit can find free resources for tax preparation on the state Franchise Tax Board website. here.

For more information on the California tax credit for young children, visit the state’s website here. For more resources on how to file a tax return and claim a credit, text EITC to 855-620-2180.

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Nadia Lopez covers the Latino community in the San Joaquin Valley for The Fresno Bee in partnership with Report for America. Before that, she worked as a town hall reporter for San José Spotlight.

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