This act shall be known and may be cited as the Earned Income Tax Credit Information Act.
Part 10.3EARNED INCOME TAX CREDIT INFORMATION ACT
Section § 19850
This law is officially named the Earned Income Tax Credit Information Act.
Earned Income Tax Credit EITC tax credit information income tax credit taxpayer information tax benefits financial assistance low-income individuals tax filing income eligibility tax refund state tax policy tax credits economic relief
Section § 19851
This section explains that the federal earned income tax credit (EITC) was established to help low-income workers and reduce their reliance on welfare. However, many eligible Californians fail to claim this credit, missing out on substantial financial benefits. In response, California created its own EITC to further support low-income workers.
The law aims to help these families by ensuring they get their share of federal and state EITCs, ultimately bringing more federal money into California's economy. To achieve this, the state will provide information to eligible individuals so they can claim these credits on their tax returns. Employers and state agencies will notify those who may qualify for EITC and inform them of free tax preparation services.
The Legislature finds and declares as follows:
(a)CA Revenue and Taxation Code § 19851(a) Congress created the federal earned income tax credit (EITC) in 1975 to offset the adverse effects of the Medicare and social security payroll taxes on working poor families and to encourage low-income workers to seek employment rather than welfare.
(b)CA Revenue and Taxation Code § 19851(b) Due to a relatively low percentage of federal earned income tax credit eligible persons who participate in the federal Earned Income Tax Credit program, hundreds of millions of federal dollars go unclaimed by the working poor in California.
(c)CA Revenue and Taxation Code § 19851(c) In 2015, the State of California authorized a California EITC to amplify the poverty-reducing effects of the federal
EITC for the poorest working Californians.
(d)CA Revenue and Taxation Code § 19851(d) In order to alleviate the tax burden on working poor persons and families, to enhance the wages and income of working poor persons and families, to ensure that California taxpayers receive their share of the federal money available in the federal EITC program and other state and federal antipoverty tax credits, to ensure that the poorest working Californians access the additional California EITC, and to inject additional federal money into the California economy, the state shall facilitate the furnishing of information, as permitted by Section 19551.3, to working poor persons and families regarding the availability of the federal and California EITC so that they may claim those credits on their federal and state income tax returns.
(e)CA Revenue and Taxation Code § 19851(e) It is the intent of this act to offer the most cost-effective assistance to eligible taxpayers by
taking steps to ensure that eligible Californians claim both the federal and California EITC and other state and federal antipoverty tax credits and are aware of free tax preparation services through the following:
(1)CA Revenue and Taxation Code § 19851(e)(1) Notices provided by their employers.
(2)CA Revenue and Taxation Code § 19851(e)(2) Notices provided by state departments and agencies that serve those who may qualify for the EITC.
earned income tax credit EITC participation working poor families California EITC tax burden relief federal EITC program poverty reduction low-income workers anti-poverty tax credits tax return filing free tax preparation employer notices state agency notices financial benefits economic support
Section § 19852
This section provides definitions for key terms related to unemployment and tax credits in California. An 'Employer' is any company in California that provides unemployment insurance to its workers. 'Employee' is anyone covered by that insurance. 'Federal EITC' and 'California EITC' refer to the earned income tax credits at the federal and state levels, meant to support low-income earners.
'State departments and agencies serving those who might qualify for tax assistance include the Department of Education, Employment Development, Health Care Services, and Social Services, each with specific programs. 'VITA' stands for Voluntary Income Tax Assistance, a free service for basic tax preparation.
'CalFile' is a free online program for Californians to file tax returns. Any references to the 'Internal Revenue Code' pertain to the U.S. Code and its amendments. Updates to this section apply to notices required in specific years mentioned, 2017 and 2024.
For purposes of this part, the following terms have the following meanings:
(a)CA Revenue and Taxation Code § 19852(a) “Employer” means any California employer who is subject to, and is required to provide, unemployment insurance to their employees, under the Unemployment Insurance Code.
(b)CA Revenue and Taxation Code § 19852(b) “Employee” means any person who is covered by unemployment insurance by their employer, pursuant to the Unemployment Insurance Code.
(c)CA Revenue and Taxation Code § 19852(c) “Federal EITC” means the federal earned income tax credit, as defined in Section 32 of the Internal Revenue Code.
(d)CA Revenue and Taxation Code § 19852(d) “California
EITC” means the California earned income tax credit, as defined in Section 17052.
(e)CA Revenue and Taxation Code § 19852(e) “State departments and agencies that serve those who may qualify for Voluntary Income Tax Assistance or state and federal antipoverty tax credits, including the federal and the California EITC” means the following departments and agencies:
(1)CA Revenue and Taxation Code § 19852(e)(1) The State Department of Education with respect to information from the free or reduced-price meal program and National School Lunch Program.
(2)CA Revenue and Taxation Code § 19852(e)(2) The Employment Development Department with respect to information from the California Unemployment Insurance program.
(3)CA Revenue and Taxation Code § 19852(e)(3) The State Department of Health Care Services with respect to
information from the Medi-Cal program.
(4)CA Revenue and Taxation Code § 19852(e)(4) The State Department of Social Services with respect to information from the CalFresh and CalWORKs programs.
(f)CA Revenue and Taxation Code § 19852(f) “State and federal antipoverty tax credits” means state and federal tax credits that are designed to alleviate poverty and tax burdens for low-income households.
(g)CA Revenue and Taxation Code § 19852(g) “Voluntary Income Tax Assistance” or “(VITA)” means the free basic income tax return preparation program, for federal and state personal income tax returns, managed by the Internal Revenue Service and operated by Internal Revenue Service partners and trained volunteers.
(h)CA Revenue and Taxation Code § 19852(h) “CalFile” means the Franchise Tax Board’s free, direct, online
program for taxpayers to complete and e-file their state personal income tax returns.
(i)CA Revenue and Taxation Code § 19852(i) Unless otherwise specifically provided, the terms “Internal Revenue Code,” “Internal Revenue Code of 1954,” or “Internal Revenue Code of 1986,” for purposes of this part, mean Title 26 of the United States Code, including all amendments thereto, as enacted on the specified date for the applicable taxable year as defined in paragraph (1) of subdivision (a) of Section 17024.5.
(j)CA Revenue and Taxation Code § 19852(j) The amendments made to this section by Section 2 of Chapter 294 of the Statutes of 2016 shall apply to notices required pursuant to Section 19853 furnished on or after January 1, 2017.
(k)CA Revenue and Taxation Code § 19852(k) The amendments made to this section by Section 9 of Chapter 55 of
the Statutes of 2023 shall apply to notices required pursuant to Section 19853 furnished on or after January 1, 2024.
unemployment insurance earned income tax credit California EITC Federal EITC Voluntary Income Tax Assistance CalFile tax return preparation State Department of Education Employment Development Department Medi-Cal program CalFresh CalWORKs state antipoverty tax credits Internal Revenue Code amendments Franchise Tax Board
Section § 19853
Employers must notify employees about potential eligibility for tax credits, including federal and California Earned Income Tax Credits, around the time they issue annual wage summaries like W-2 or 1099 forms. They must also send a second notification in March. State agencies serving those eligible for these credits should notify recipients annually, using direct or indirect communication. Notifications must be given directly, not just posted or internal mailed, though extra postings are encouraged. Changes to how and when notices are given apply from January 1, 2017, and January 1, 2024, and the law fully comes into effect on January 1, 2029.
(a)Copy CA Revenue and Taxation Code § 19853(a)
(1)Copy CA Revenue and Taxation Code § 19853(a)(1) An employer shall notify all employees that they may be eligible for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California EITC, within one week before or after, or at the same time, that the employer provides an annual wage summary, including, but not limited to, a Form W-2 or a Form 1099, to any employee.
(2)CA Revenue and Taxation Code § 19853(a)(2) An employer shall send a second notification to all employees during the month of March of the same year in which the employer notified employees pursuant to paragraph (1).
(b)Copy CA Revenue and Taxation Code § 19853(b)
(1)Copy CA Revenue and Taxation Code § 19853(b)(1) The state departments and agencies that serve those who may qualify for VITA or state and federal antipoverty
tax credits, including the federal and the California EITC, as defined in subdivision (e) of Section 19852, shall notify their program recipients that they may be eligible for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California EITC, at least once per year during the months of January through March, or, alternatively, shall provide both notifications during a regularly scheduled contact with a recipient by telephone, mail, or electronic communication, or by an in-person communication.
(2)CA Revenue and Taxation Code § 19853(b)(2) State departments or agencies that serve those who may qualify for VITA or state and federal antipoverty tax credits, including the federal and the California EITC, as defined in subdivision (e) of Section 19852, and that do not directly communicate with persons or households with persons who may qualify for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California
EITC, may communicate indirectly through agencies, districts, or regulated entities that serve eligible persons or households with eligible persons.
(3)CA Revenue and Taxation Code § 19853(b)(3) State departments or agencies that serve those who may qualify for VITA or state and federal antipoverty tax credits, including the federal EITC and the California EITC, as defined in subdivision (e) of Section 19852, are encouraged to develop the most effective method to provide notice to recipients of eligibility for VITA, CalFile, and state and federal antipoverty tax credits, including the federal and the California EITC, as long as the notice contains substantially the same language as the notice described in Section 19854.
(c)Copy CA Revenue and Taxation Code § 19853(c)
(1)Copy CA Revenue and Taxation Code § 19853(c)(1) The employer shall provide the notifications required by subdivision (a) by handing them directly to the employee or mailing them to the employee’s last known address.
(2)CA Revenue and Taxation Code § 19853(c)(2) Any notice created by the employer shall include substantially the same language as the notice described in Section 19854.
(3)CA Revenue and Taxation Code § 19853(c)(3) The notification required by paragraph (2) of subdivision (a) may be sent electronically.
(d)CA Revenue and Taxation Code § 19853(d) The employer shall not satisfy the notification required by subdivision (a) by posting a notice on an employee bulletin board or sending it through office mail. However, these methods of notification are encouraged to help inform all employees of VITA, CalFile, and state and federal antipoverty tax credit eligibility, including the federal and the California EITC.
(e)CA Revenue and Taxation Code § 19853(e) The amendments made to this section by Section 3 of Chapter 294 of the Statutes of 2016 shall apply to notices furnished on or after January 1, 2017.
(f)CA Revenue and Taxation Code § 19853(f) The amendments made to this section by Section 10 of Chapter 55 of the Statutes of 2023 shall apply to notices furnished on or after January 1, 2024.
(g)CA Revenue and Taxation Code § 19853(g) This section shall become operative on January 1, 2029.
tax credit notification federal EITC California EITC employer responsibility employee notification annual wage summary March notification VITA eligibility CalFile eligibility state agency communication direct notification indirect notification electronic notice employee mailing implementation date January 1 2029
Section § 19854
This section outlines that employees and public assistance recipients must be informed about the availability of federal and California Earned Income Tax Credits (EITC) in a specific way. These tax credits are designed for low-income individuals and families and won't affect eligibility for certain benefits like Medicaid, SSI, or SNAP. To claim these credits, eligible individuals need to file the appropriate tax returns and forms. The Voluntary Income Tax Assistance (VITA) program can provide free tax preparation services, and California returns can also be e-filed for free using CalFile.
The Foster Youth Tax Credit is specifically for former and current foster youth aged 18-25. Any changes made to how this information is provided were effective for notices after January 1, 2017, and new updates take effect from January 1, 2024.
(a)CA Revenue and Taxation Code § 19854(a) The notice required under Section 19853 to be furnished to employees and public assistance program recipients regarding the availability of the federal and the California EITC shall state substantially as follows:
Based on your annual earning, you may be eligible for the following assistance:
Voluntary Income Tax Assistance (VITA) Program – VITA is a free basic income tax return preparation program, for federal and state personal income tax returns, managed by the Internal Revenue Service and operated by Internal Revenue Service partners and trained volunteers.
Federal Earned Income Tax Credit (federal EITC) – The federal EITC is a refundable credit for
low-income working individuals and families. The federal EITC will not impact certain public assistance benefits. In addition, federal EITC payments are typically NOT used to determine eligibility for the following:
(A)CA Revenue and Taxation Code § 19854(A) Medicaid.
(B)CA Revenue and Taxation Code § 19854(B) Supplemental Security Income.
(C)CA Revenue and Taxation Code § 19854(C) Supplemental Nutrition Assistance Program.
(D)CA Revenue and Taxation Code § 19854(D) Low-income housing.
(E)CA Revenue and Taxation Code § 19854(E) Temporary Assistance for Needy Families payments.
To receive the federal EITC, you must file a federal tax return and fill out the EITC form, which can be found in the Federal Income Tax Return Booklet. For additional information on your eligibility to receive the federal EITC and other federal antipoverty tax
credits, visit www.irs.gov.
California Earned Income Tax Credit (California EITC) and Young Child Tax Credit (YCTC) – The California EITC and YCTC are refundable credits for low-income working individuals and families. The California EITC and YCTC are similar to the federal EITC and will not impact certain public assistance benefits.
Foster Youth Tax Credit (FYTC) – The FYTC is a refundable credit for former and current foster youth between 18 and 25 years of age who were in foster care while 13 years of age or older. The FYTC will not impact certain public assistance benefits.
To claim the California EITC, you must file a California Income Tax Return and fill out the California EITC form (Form FTB 3514) and attach it to your tax return. For additional information on the availability of the credit, including eligibility requirements, or form questions, visit www.ftb.ca.gov and
enter “CalEITC” in the search box.
You may also be eligible to have both your federal and state tax returns prepared and filed for free using VITA services. For additional information on the free tax filing service, and location and hours of operation, visit www.ftb.ca.gov and enter “VITA” in the search box.
Additionally, you may be eligible to e-file your California return directly with the Franchise Tax Board for free using CalFile. For additional information on CalFile, visit www.ftb.ca.gov and enter “CalFile” in the search box.
(b)CA Revenue and Taxation Code § 19854(b) The amendments made to this section by Chapter 294 of the Statutes of 2016 apply to notices furnished on or after January 1, 2017.
(c)CA Revenue and Taxation Code § 19854(c) The amendments made to this section by the act adding this subdivision shall apply to
notices furnished on or after January 1, 2024.
Earned Income Tax Credit Voluntary Income Tax Assistance refundable tax credits low-income individuals low-income families Medicaid Supplemental Security Income Supplemental Nutrition Assistance Program foster youth Foster Youth Tax Credit tax return filing free tax preparation CalFile California tax credits Young Child Tax Credit
