Note: Effective January 1, 2021, taxpayers who have an Individual Taxpayer Identification Number (ITIN) may be eligible to receive the California Earned Income Tax Credit (CalEITC) on their California income tax return.
Who qualifies for the CalEITC
A taxpayer qualifies for the CalEITC if all of the following are true:
- The taxpayer and spouse have a valid SSN or ITIN.
- Qualifying children meet rules similar to the federal EIC rules.
- If married, must file Married Filing Jointly.
- Must have lived in California for more than half the year.
- Must file either Form 540, 540EZ, or 540NR.
- Must be at least 18 years old or have a qualifying child
- Must have earned income. (Note that IHSS payments can be included or excluded as desired.)
- The adjusted gross income must be $30,000 or less.
What disqualifies a taxpayer from receiving CalEITC
The taxpayer does not qualify for the CalEITC if any of the following are true:
- Non-MFJ filers if either the taxpayer or spouse was a nonresident alien for any part of the year.
- Filing Married Filing Separately.
- MFJ filers filing Form 540NR who lived in the state for less than 184 days.
- Foreign earned income is reported on federal Form 2555.
- Taxpayer must qualify for Federal EITC
- Investment income greater than $3,882.
- The taxpayer could not be a qualifying child of someone else, subject to certain conditions.
From the California Return Menu in TaxSlayer ProWeb select:
- CA Earned Income Credit (Form 3514)
- Answer the two questions re federal EIC and CalEITC being disallowed.
- If the qualifying child's address is different than the taxpayer's, enter it.
- Enter or exclude IHSS payments if desired
- Enter any prison wages or nonqualified pension payments to exclude, if needed
- Complete the paid preparer information for Form 3596.
Note: This is a guide on the California Earned Income Tax Credit in TaxSlayer ProWeb. It is not intended as tax advice.