As the California Legislature wrapped the annual apportions and/or budget authority for the new fiscal year, starting on July 1^st (of course enacted it timely), for the State of California, it enacted a new tax credit, which is California’s own version of the federal Earned Income Tax Credit, starting with the 2015 tax year.

A little background information, the federal Earned Income Tax Credit is a refundable tax credit, which means that if an individual taxpayer does not have any income tax liability (mainly due to low income) he/she could still get this tax credit, and thusly a tax refund, based on his/her earned income level (which is basically salary/wages and/or net self-employment income) and the number of “qualifying children” a person has.  The maximum federal Earned Income Tax Credit for the 2015 tax year is projected to be $6,242.

The California Earned Income Tax Credit will have similar criteria as the federal version of this tax credit, except that the amount of the California Earned Income Tax Credit would at 85% (for the 2015 tax year) of the federal Earned Income Tax Credit, and the maximum that California will pay out for each person (taking this 85% factor into account) for the 2015 tax year is projected to be $2,653.  Also the differences for an individual in qualify the California Earned income Tax Credit vs. the federal Earned Income Tax Credit, is as follows:

• Net self-employment income qualifies for the federal credit, but does not for the California credit;

• Only earned income that is subject to California tax withholdings (e.g. wages/salaries) would be qualify for the California credit;

• An individual and/or a qualifying child needs to live in California of at least one-half of a tax year for the California Earned Income Tax Credit, whereas for the federal credit, an individual and/or a qualifying child needs to live in the US of at least one-half of a tax year.

Other than these differences, the criteria of the California Earned Income Tax Credit would be similar to the federal Earned Income Tax.

So, if you think that you may be entitled to, and/or expected to receive, the federal Income Tax Credit for the 2015 tax year, please  contact us , and we would be more than happy to see if you qualify for the California Income Tax Credit as well, and how much of this credit you expect to receive, compared to the federal version of this credit.