S. E. Williams
Last year was pretty tough for Jordan Woods of San Bernardino County. He had worked a series of part-time, temporary jobs that dried up one after another. This year started out pretty much the same. His misfortune appeared to culminate with a car accident last month that totaled his car.
Woods had planned to reduce his full-coverage insurance policy to liability only in order to save money but he never got around to it.
“Sometimes it pays to put things off,” Woods said with a smile. “Because I still had full coverage I’m going to get enough money back to replace it— it won’t be a new car but at least I’ll be able to get around.”
Woods learned about the California Earned Income Tax Credit (CalEITC) from a friend. He didn’t know all the details but logged on to caleitc4me.org. There he found out he, not only, qualified for the tax credit, but also, learned that he could have his income taxes prepared for free.
“I’m really short on cash right now so I was really glad to learn I could get my taxes prepared [for free] and not have to pay for it.” He added, “I needed to get my taxes done and get my refund so I could pay my car insurance deductible.”
Woods explained how the website directed him to a free tax preparation location near his home.”I called to make an appointment and they were able to get me in the next day. When I arrived for my appointment the whole process only took about 40 to 45 minutes. “
Woods said he has paid as much as $150 to file his taxes in previous years; money he didn’t have this time. “It was a blessing to be able to get in right away and not having to pay was a bonus.”
“I didn’t know much about CalEITC before, but I’m going to spread the word because the way the lady who helped me explained it, I’m getting a larger refund because of it–now, I’ll be able to pay my insurance deductible. That way I can get another car and not have to depend on my parents.”
Now that Woods knows about the CalEITC, he is spreading the word. “ I told them [my parents] they should check out the website too. I was thinking it could help them also.”
The experience of Woods and his family is not unique. This year’s first ever California Earned Income Tax Credit is expected to boost the income of hundreds and thousands of low income families and individuals in California.
Research conducted on the federal Earned Income Tax Credit established years ago has shown such credits are among the most effective tools in fighting poverty. Programs like EITC are also proven to increase work effort. The California Earned Income Tax Credit (CalEITC) was established to expand on that success.
Also, according to a research report, (EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development), women who benefited from earned income tax credit programs experienced higher wage growth in subsequent years than other women in similar circumstances who did not participate. In addition, by increasing the employment of single mothers, earned income tax credit programs help reduce the number of female-headed households receiving cash welfare assistance.
According to an October 2015 report by the Center for Budget and Policy Priorities, the return from earned income tax credits at both state and federal levels lead to benefits at virtually every stage of life. For example, children in families who receive tax credits do better in school; are more likely to attend college; and can be expected to earn more as adults.
One researcher noted, “Income transfers to pregnant women through a work-conditional tax subsidy substantially improved the health of their new born children.” Similarly according to the report, mothers who received the largest earned income tax credits in the 1990’s had greater improvements in their own health indicators.
The Center for Budget and Policy Priorities Report also showed earned income tax credits can lead to improved educational outcomes for young children in low-income households. Also, according to the report, for each $1,000 increase in annual income over two to five years, children’s school performance improves on a variety of measures, including academic test scores.
Economists have noted the beneficial impact not only on poverty, but also on consumption, health, and children’s academic outcomes all of which positively impact local economies. Some economists even believe such programs may have a positive impact on the inter-generational transmission of poverty as well.
You may be eligible for the CalEITC if you have earned income in 2015 within certain limits (less than $6,580 if you have no dependents and up to $13,870 with two or more dependents); you, your spouse, and any qualifying children each have a social security number; you do not use the ‘Married/Registered Domestic Partners (RDP) filing separate’ filing status; and, you lived in California for more than half the tax year. For more information regarding eligibility requirements for the CalEITC and to learn how to file your income tax return for free visit caleitc4me.org.
This year’s tax filing deadline is extended to Monday, April 18. CalEITC4ME works to make the filing process simple by connecting tax filers to free tax preparation services. For example, if you are eligible for the Earned Income Tax Credit or made $54,000 or less in 2015, you can get your tax return filed for free. For more on how to file for free visit caleitc4me.org/get-it/.