Close to Home: Don’t leave cash on the table this tax season
California’s working families are the heart of our communities. However, for too many working people — our neighbors who work extremely hard but through no fault of their own still make the least — a job alone is not enough to provide for a family, pay rent and rise above poverty.
Economic insecurity and inequality have become defining issues of our time. That’s why last year California lawmakers and Gov. Jerry Brown created the new state Earned Income Tax Credit, taking a powerful step toward boosting economic security for Californians who are the backbone of some of our largest employment sectors.
Any family (with two or more children) that earns up to $14,161 annually can get up to $2,406 back at tax time under the Golden State’s Earned Income Tax Credit, which allows them to invest in the basics such as groceries, rent and their kids’ schooling.
The federal government has had its own form of the Earned Income Tax Credit for several years now, and it has long been recognized as one of the most effective poverty reduction programs in the nation, encouraging work while lifting up communities by stimulating the local economy.
However, every year more than $30 million in federal funds are left on the table by families on the North Coast, including residents of Sonoma, Del Norte, Humboldt, Lake, Marin, Mendocino and Trinity counties. That’s available money, if claimed, that could be invested with working families and put to work supporting local businesses ensuring a stronger economy for all.
Last year was the first year of the California Earned Income Tax Credit, and more than 400,000 Californians claimed almost $200 million in cash-back refunds from the credit. And, because of the grassroots outreach efforts to eligible families through the new statewide CalEITC4Me campaign, more Californians are now claiming the federal credit as well.
The combined economic impact of the state and federal Earned Income Tax Credit is significant, putting up to $6,500 directly into the pockets of families while injecting hundreds of millions of dollars into our local economies. The benefits extend beyond just economic development. For example, studies show children whose families receive these tax credits tend to be healthier, perform better in school and earn 17 percent higher incomes later in life.
Still, we must do better at getting families to file and claim the state and federal tax credits they’ve earned. Many fail to file because they don’t owe any taxes or don’t know how to claim their money, leaving $2 billion of available tax credit money statewide on the sidelines each year. That’s why Gov. Brown, state leaders and community groups have joined together to spread the word through CalEITC4Me.
By getting a boost in income directly to Californians who are working hard — but still not making enough money to provide for their families — we can start to address the fundamental stresses of poverty that keep people from feeling secure and being able to fully participate in society. Together, we can help win the war on poverty in California by giving some of our most vulnerable neighbors the resources they need to thrive.
To see if you are eligible for cash back and to find a free tax preparation site near you, go to CalEITC4Me.org.
Mike McGuire, D-Healdsburg, represents the North Coast in the state Senate. Josh Fryday is president of Golden State Opportunity, which provided funding to help with outreach for CalEITC4Me.