New State Tax Credit Aims to Help California’s Poorest

Patricia Anderson-Munoz watches Diane Deatherage prepare her taxes at a Sacramento tax event. Anderson-Munoz is waiting to see if she qualifies for a new state tax credit. (Katie Orr/KQED)

Patricia Anderson-Munoz says getting her taxes done is always nerve-wracking. The single mom of two girls makes between $10,000 and $12,000 a year providing care for disabled and elderly clients. Anderson-Munoz says most of her income goes toward housing. She does get some government assistance.

“(But) It goes so fast,” she says. “And getting a refund is like Christmas in February or March.”

This year her refund might be bigger. To find out how much bigger, Anderson-Munoz has come to a free tax preparation event in Sacramento. Because of her financial situation, she might be eligible for California’s new Earned Income Tax Credit, or EITC. It targets Californians with the lowest incomes, people like Anderson-Munoz.

“The idea of getting a little bit extra from the state is like a breath a fresh air,” she laughs.

The EITC provides a tax refund to people making less than $14,000 a year. The state’s Franchise Tax Board says a family that qualifies will get an average of $900. Assembly Speaker Toni Atkins says that’s a lot of money, especially when paired with the federal EITC.

“We think it’s pretty significant in terms of helping the lowest and most vulnerable Californians be able to maximize, a little bit, the tax credit,” she says. “And if they combine it with the federal tax credit, it could mean pretty significant resources for a struggling, working California family.”

Atkins pushed hard for the new tax credit, which will benefit about 2 million people at a cost of about $380 million. But she acknowledges lawmakers made a conscious decision to target the EITC toward a smaller group of very poor Californians, rather than giving a lesser benefit to more people.

Concerns Over Leaving Others Behind

Alissa Anderson, with the California Budget and Policy Center, says the tax credit’s narrow focus leaves a lot of families behind.

“For example, a parent with two kids who’s working full time all year long at the minimum wage has an income right around the poverty line,” she says, “but actually earns too much to qualify for the new credit.”

Anderson also questions the state’s decision to exempt self-employed workers from the credit.

“Basically, what that means is that very low-earning workers who maybe are having trouble finding a job with an employer, but who have the motivation to start their own business or patch together odd jobs to make ends meet, won’t be eligible for the credit,” Anderson says.

Atkins says she’d like to see the credit expanded in the future to include more people. But first they have to make sure people who are eligible now take advantage of it.

“The quicker we get this information out the better,” Atkins says. “Because I recall, when I was a minimum wage earner, I filed my taxes as soon as I could because it meant money back typically.”

Back at the Sacramento tax preparation event, single mom Anderson-Munoz waits patiently to hear whether she qualifies for the state’s new credit. After the numbers are plugged in, Anderson-Munoz finds out she qualifies for a $681 credit. She is overjoyed.

“Oh my gosh, are you kidding me? Are you kidding me? Thank you so much! Oh my gosh! Oh my gosh!” she exclaims.

Between the federal and state tax credits, Anderson-Munoz will get more than $5,000 back. She says she plans to use some of it to throw her daughter a Sweet 16 party.

  • Mike Doyle

    Glad this tax benefit will help people because everyone else is paying for it. But then she blows it on a sweet 16 party. Are you kidding me?

  • Kurt thialfad

    What are the opportunities for fraud here? I understand there is a great deal of fraud with the federal EITC. Can we expect to see more fraud at the state level?

Author

Katie Orr

Katie Orr is a Sacramento-based reporter for KQED's Politics and Government  Desk, covering the state Capitol and a variety of issues including women in politics, voting and elections and legislation. Prior to joining KQED in 2016, Katie was state government reporter for Capital Public Radio in Sacramento. She's also worked for KPBS in San Diego, where she covered City Hall.

Katie received her masters degree in political science from San Diego State University and holds a Bachelors degree in broadcast journalism from Arizona State University.

In 2015 Katie won a national Clarion Award for a series of stories she did on women in California politics. She's been honored by the Society for Professional Journalists and, in 2013, was named by The Washington Post as one of the country's top state Capitol reporters.   She's also reported for the award-winning documentary series The View from Here and was part of the team that won  national PRNDI and  Gabriel Awards in 2015. She lives in Sacramento with her husband. Twitter: @1KatieOrr

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