We’re a month out from Tax Day and more than 1 million California families with low earnings have already received tax refunds from the California Earned Income Tax Credit (CalEITC), with many more expected to get refunds in coming weeks. These tax refunds couldn’t come at a better time.
With state public health officials calling for “social distancing” measures to slow the spread of COVID-19, events and conferences — including the California Budget and Policy Center’s own Policy Insights 2020 — have been canceled, tourism and travel has slowed, and large tech companies have asked their employees to work from home. Workers who earn low wages and are employed by businesses that depend on the purchases made by conference and event attendees, tourists, and employees of tech firms are sure to feel the brunt of these measures in the form reduced work hours, unpaid leave, or even layoffs.
For these workers, a tax refund from the CalEITC, as well as California’s new Young Child Tax Credit, could be a lifeline because they’ll get hundreds or even thousands of dollars back that can pay for groceries, diapers, and other basic needs.
The Budget Center has an interactive tool showing how much Californians can benefit from these tax credits this year.
Yet, it is also important to remember that hundreds of thousands of Californians who earn little from their jobs — and who are especially at risk of economic hardship — do not qualify for the CalEITC or Young Child Tax Credit simply because they file their taxes with a federally issued Individual Taxpayer Identification Number (ITIN).
These workers are particularly vulnerable right now because they can’t get Unemployment Insurance payments if they are laid off or if their work hours are cut, and they can’t get Disability Insurance payments if they’re unable to work because they’ve been exposed to COVID-19.
Had California extended the CalEITC and Young Child Tax Credit to people who file their taxes with ITINs in 2019, as both the state Assembly and Senate proposed doing, they could have at least counted on getting a tax refund this spring to help stretch their limited resources while the economy rides out the outbreak.
The COVID-19 public health emergency highlights the importance of equitable public policies, including making the CalEITC and Young Child Tax Credit inclusive of all tax filers with low earnings from work. And the Budget Center’s easy-to-print infographic shows what these tax credits can help families pay for and why including all families with low earnings is a critical next step for California.
Still, it’s not too late for state policymakers to act and help all families with low earnings. Policymakers can extend the CalEITC and Young Child Tax Credit to families who are excluded. Californians automatically get a six-month extension — until October 15, 2020 — to file for the 2019 tax year, and those who already filed can amend their returns in order to claim the credits retroactively.
While there may be uncertainty for some time across our state and nation due to the COVID-19 public health emergency, California can do something now to help the many people who make our communities work every day.
Alissa Anderson is a Senior Policy Analyst with the California Budget & Policy Center.