Asian Inc. tax preparer Crystal Huang helping a client prepare her 2015 tax returns.
The Golden State’s poverty statistics are grim: Two in five people live just over the federal poverty level (FPL), and the state has the highest child poverty rate in the nation.
But this year, for the first time, California’s working poor will get to keep more of their earnings in their pockets thanks to the California Earned Income Tax Credit (EITC). But people with low incomes – less than $13,870 a year – must be sure to file their taxes in order to get their money back.
600,000 Families Eligible
Around 600,000 families in California are eligible for the state EITC. Some 12 percent are Asian Americans or Pacific Islanders, 30 percent are Latino, 12 percent are Black, and more than 15,000 individuals are Native American. The majority of those eligible are single women who are working part-time jobs.
Signed into law by Gov. Jerry Brown last year, the state’s EITC program is expected to cost the state $380 million. California is the 25th state, plus the District of Columbia, with such a program. The tax credit is modeled on the federal EITC program, which has been around since 1975.
California Budget and Policy Center (CBPC) Communications Director Steven Bliss called the state program “an important tool for helping move the lowest earners toward economic security.”
Some of those targeted for the program, he said, “have earnings so low that they may not even file state income taxes.”
To qualify for the California’s EITC a person must earn no more than $13,870 a year. On average those who apply for the credit will receive $900 back from the state. Families with three or more children could get back more than $2,500.
“Every community has people who live in deep poverty,” said state Assembly Member Toni Atkins, D-San Diego, speaking on a panel with other state officials in Sacramento, March 9. “The state’s poorest communities will benefit from this.”
Even though California is doing outreach around the new program, not everyone knows about it, especially in the Asian community, said Crystal Huang. She wears the hats of tax preparer and housing counselor at Asian, Inc., in San Francisco.
San Francisco resident Hou (who would only share her last name) was one of them. The Chinese immigrant, 40, has been raising her five-year-old son alone since her husband died two years ago, leaving her with very few resources. She pulls in about $5,000 a year from her three part-time jobs and struggles to put rice on the table.
She came to Asian Inc. to get her taxes filed for free and found, to her surprise, that she could get back $1,300 from the state’s EITC program, plus another $1,500 from the federal EITC, plus an additional $250 from San Francisco’s Working Families Credit – a little over $3,000 in all.
Rick Kim, economic development services manager with Koreatown Youth and Community Center in Los Angeles, which provides free tax help for low-income people among other services, said it’s too early to know how many people will apply for the new state program. Many of his clients, he said, work in very low-paid, high-stress jobs, such as in the garment industry or supermarkets.
He noted that the CalEITC could motivate more people who fall below the federal filing threshold to file returns because they could qualify for the benefits.
“For a family making around $10,000 or $12,000, a benefit of $500-$800 is significant,” he said.
Outreach to Immigrants
CalEITC4Me.org, a coalition of community-based organizations, is conducting outreach to neighborhoods with the highest number of eligible families.
Fresno Interdenominational Refugee Ministries is one of them. It is working with the Southeast Asian population in Fresno, many of whom are Hmong and Laotian.
“We are making sure the community has in-language materials and helping people get free tax assistance,” said Executive Director Zachary Darrah.
He noted that not speaking English limits many immigrants’ employment and educational opportunities. That aside, many immigrants have a “general mistrust” of government, and it takes some persuasion by organizations, such as his to convince them otherwise.
“For folks who are living in poverty, [the extra money] is a game-changer for them,” Darrah said. “That goes a long way toward paying bills, paying for housing costs, paying for education, perhaps a mode of transportation--there are a lot of uses for those funds for families living in poverty, as many families are here in Fresno.”
San Francisco’s Hou, who speaks very little English, has decided to invest the tax credit dollars she will get back in her son’s education.
For more information, go to caleitc4me.org. (NAM reporter Anna Challet contributed to this story)
The above article, by Viji Sundaram, originally appeared on the newamericamedia.org website on March 18, 2016.