CA Earned Income Tax Credit: How to Qualify in 2025

California earned income for purposes of the FYTC is the same as for the California EITC. You must sign your tax return and attach form FTB 3514 to your return. Check the box to indicate your consent and authorization for the California Department of Social Services (CDSS) to share limited information about you with the California Franchise Tax Board for purposes of verifying your eligibility for the FYTC.

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Remember, the credit is for working households that need help to make ends meet. Married couples filing jointly often have a higher income threshold before eligibility phases out. If one spouse has little or no earnings, their combined income may still qualify. In contrast, those filing separately lose access to CalEITC regardless of income. If you file Form 540NR, enter your California exemption credit percentage from Form 540NR, line 38 on form FTB 3514, line 40. However, if you completed Worksheet 4, enter the California exemption credit percentage from Worksheet 4, line 10 on form FTB 3514, line 40.

WHAT IS THE CALIFORNIA EARNED INCOME TAX CREDIT? (CalEITC)

Any valid SSN can be used, not only those that are valid for work. Additionally, upon receiving a valid SSN, the individual should notify the FTB in the time and manner prescribed by the FTB. The YCTC is available if the eligible individual or spouse has a qualifying child younger than six years old. For more information, see General Information B, Differences in California and Federal Law, Specific Instructions for line 7, and go to ftb.ca.gov and search for eitc. The refundable California Earned Income Tax Credit (EITC) is available to taxpayers who earned wage income subject to California withholding and/or have net earnings from self-employment.

Refundable income tax credits are proven tools for improving people’s economic security. These credits have also been linked to long-term benefits for children, including better health and school achievement, higher educational attainment, and increased employment and earnings when children become adults. Given these benefits, many states have state versions of these credits to enhance the positive effects of tax credits for state residents. Over the past decade, state leaders have made significant progress in expanding cash support for Californians with low incomes through refundable state income tax credits.

It’s available even if you don’t owe any taxes, which means you can earned income tax credits in california still receive a refund. For additional details on eligibility and credit calculations, refer to the FTB’s official CalEITC page. Navigating tax credits can be overwhelming, especially when you’re trying to maximize your refund. One powerful benefit available to many working Californians is the CA earned income tax credit.

• Some taxpayers may also qualify for the Young Child Tax Credit (YCTC), which provides additional relief for families with children under six.
• Enter the total amount of your California wages from your federal Form(s) W-2, Wage and Tax Statement.
• This tool will not translate FTB applications, such as MyFTB, or tax forms and other files that are not in HTML format.
• The California Earned Income Tax Credit (CalEITC) is a state-level tax credit for low-to-moderate-income working individuals and families.
• This substantial growth reflects a decade of progress in which state policymakers consistently expanded financial support to families and individuals with low incomes through refundable state income tax credits.
• Follow Step 1 through Step 7 below to determine if you qualify for the credit and to figure the amount of the credit.

Line 17 – Nontaxable combat pay

For more detailed insights on financial strategies for small businesses, check out our blog. We strive to provide a website that is easy to use and understand. Do not include Social Security numbers or any personal or confidential information. Today, the CalEITC Coalition has rebranded as Prosper California and consists of 46 member organizations.

Follow Step 1 through Step 7 below to determine if you qualify for the credit and to figure the amount of the credit. In general, for taxable years beginning on or after January 1, 2015, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2015. However, there are continuing differences between California and federal law.

• Using an online calculator or worksheet like this official booklet by the FTB can be an invaluable resource to ensure you’re not leaving money on the table.
• If you elect to exclude such payments from your earned income for California EITC purposes, enter the amount you received as Medicaid waiver payments or IHSS payments that are nontaxable for federal purposes on line 14.
• You may qualify for up to $3,644 cash back or a reduction of the tax you owe.
• To qualify, they must pay more than half the cost of maintaining a home for a dependent.
• CalEITC eligibility will be reviewed with every tax return that is prepared.

What Is the California Earned Income Tax Credit?

And while state leaders have made progress boosting workers’ earnings by raising the minimum wage and pay in specific industries, many jobs still fail to pay enough to cover essential expenses. In the face of these challenges, refundable income tax credits play a vital role in helping Californians with low incomes make ends meet. The CalEITC can provide financial support to low-to-moderate-income working individuals and families in the state. As a refundable tax credit, it ensures that qualifying California residents receive a payout, even if they owe no state taxes. The credit amount varies based on the number of qualifying children claimed, offering significant financial relief to eligible filers. This makes California’s refundable income tax credits an especially important source of support for young adults just beginning their careers.

For federal agencies

The policy has become a powerful tool to not only combat poverty in California, but also promote racial and gender equity. Use CalFile to e-file your state tax return directly to the Franchise Tax Board. This is the amount of your allowable FYTC to claim on your tax return.

It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. The child must have a valid SSN or ITIN, as defined below, unless the child was born and died in 2024. Even if you owe taxes, the CalEITC can reduce the amount due, easing your overall tax burden and freeing up funds for other business or personal needs.

If the amount entered on line 23a exceeds $34,602, stop here, you do not qualify for the credit. If you meet all of the requirements for YCTC, complete Part VII, Young Child Tax Credit. If you are a part-year resident, also complete Part VIII, Part-Year Resident Young Child Tax Credit. A business license number is a reference number from a county, city, or state that allows you to engage in a specific business activity within the designated area. Complete line 13 through line 19 to figure your California earned income. Valid SSN – A valid SSN is a number issued by the Social Security Administration without regard to whether it was issued for employment or issued solely for the purpose of receiving federally funded benefits.

Line 23 – California earned income

You must check the box that applies to you (either Primary Taxpayer or Spouse/RDP) to claim the credit. If you and your spouse/RDP both qualify for the credit, you each must check the box that applies to you. If you file Form 540NR, enter your California exemption credit percentage from Form 540NR, line 38 on form FTB 3514, line 29. However, if you completed Worksheet 4, enter the California exemption credit percentage from Worksheet 4, line 10 on form FTB 3514, line 29. If certain requirements are met, you or your eligible spouse may claim the EITC, YCTC, or FYTC even if you do not have a valid SSN and instead have a valid federal ITIN. If you have a valid federal ITIN, enter it in the Your SSN or ITIN field at the top of the form.