Taxpayers With Income from Unemployment or In-Home Support Can Benefit from Recent Changes
05/14/2021
Sacramento — The Franchise Tax Board (FTB) today highlighted recent developments that expand Californians' eligibility for the California Earned Income Tax Credit (CalEITC). The changes apply to people who received unemployment insurance benefits in 2020, as well as those who received income from In-Home Supportive Services (IHSS) or a Medicaid waiver program for providing care to an individual they lived with anytime since 2016.
“I want to be sure Californians know they may be newly eligible for additional tax credits,” said State Controller and FTB Chair Betty T. Yee. “These changes may also allow more taxpayers to be eligible for a $600 or $1,200 Golden State Stimulus payment, providing additional relief for those facing pandemic-related hardship.”
Unemployment Income
On March 11, 2021, the American Rescue Plan Act changed how federal adjusted gross income (AGI) is calculated. It allowed an exclusion of up to $10,200 ($20,400 for Married Filing Jointly) of unemployment income received in the 2020 tax year. With a decrease in federal AGI, some taxpayers may now qualify to receive, or receive more money from, CalEITC and the Young Child Tax Credit (YCTC), as well as the one-time Golden State Stimulus (GSS) payment. Many people do not have to do anything to receive these additional benefits.
FTB will automatically adjust 2020 tax returns for taxpayers who already filed and claimed CalEITC and reported unemployment income. Those who qualify for a bigger tax refund can visit our website to learn when to expect their payment.
Taxpayers who already filed their 2020 tax return and did not claim CalEITC, but now have federal AGI of less than $30,001 after excluding their applicable unemployment income may now qualify for CalEITC. Taxpayers can use FTB's CalEITC calculator to see if they qualify. Qualifying taxpayers do not need to amend their tax return. Visit our website for instructions on how to download, print, and mail the California Earned Income Tax Credit (FTB 3514) form to FTB.
In-Home Supportive Services
The IHSS program provides in-home assistance to eligible elderly, blind, and disabled individuals and enables recipients to remain safely in their own homes. Income received as a caregiver from a Medicaid waiver or IHSS program for providing care to someone you live with is excludable from federal AGI.
Under a recent Office of Tax Appeals decision, income received as a caregiver from a Medicaid waiver or IHSS program for providing care to someone you live with can be included as earned income to determine eligibility for, and the amount of, CalEITC. Taxpayers may now opt to include or exclude all or none of that income as earned income on their tax return. Qualifying for CalEITC may allow taxpayers to also qualify for the YCTC and the GSS payment.
This recent tax decision affects tax years 2016 through 2020. For 2016, affected taxpayers should file a “protective claim” before the expiration of the statute of limitations to claim a refund. This protects the timeliness of their claim for refund. Visit our webpage for statute of limitation expiration dates for the 2016 tax year and how to file a protective claim.
Taxpayers who have already filed 2017 through 2020 tax returns should visit our webpage for more information.
Taxpayers who have not yet submitted a tax return should check to see if they qualify to claim CalEITC or other credits. In addition, visit our Golden State Stimulus website for more information about GSS eligibility and the timing of payments.
FTB administers two of California's major tax programs: Personal Income Tax and the Corporation Tax. FTB also administers other non tax programs and delinquent debt collection functions, including delinquent vehicle registration debt collections on behalf of the Department of Motor Vehicles, and court–ordered debt. Annually, FTB's tax programs collect more than 70 percent of the state's general fund. For more information on other taxes and fees in California, visit: taxes.ca.gov.