California’s poor leave $2 billion in tax credits unclaimed

Nearly 400,000 California households filed for the state’s Earned Income Tax Credit last year, far less than the 600,000 households eligible for it. Nearly 400,000 California households filed for the state’s Earned Income Tax Credit last year, far less than the 600,000 households eligible for it. Photo: GT Photo: GT Image 1 of / 1 Caption Close California’s poor leave $2 billion in tax credits unclaimed 1 / 1 Back to Gallery

SACRAMENTO — California’s poorest families left an estimated $2 billion on the table last year in unclaimed state and federal tax credits designed to give bigger cash refunds to low-income workers.

Nearly 400,000 California households filed for the state’s Earned Income Tax Credit last year, two-thirds of the 600,000 households who were eligible for it, state officials said Wednesday. That meant the state paid out just $200 million in cash refunds — roughly half of what it set aside for the program.

Nearly 3 million California households claimed the federal tax break last year, also less than the number eligible.

Together, unclaimed dollars from both the federal and state programs amounts to $2 billion, according to the governor’s office.

Now state officials are trying to let more eligible people know about money they might qualify for this tax season.

The federal tax credit will pay up to $6,242 per household this year, while the state tax credit will pay up to $2,653.

The cash refunds benefit California’s economy by giving the working poor added financial security and more money to spend at local businesses, state officials said.

To apply for California’s tax credit, a single person had to make less than $6,717 last year, while a family with two or more children had to have made less than $14,161. The federal tax credit has a higher threshold for income, with a single filer having to make less than $14,880 and a family with three or more children earning less than $53,505.

Taxpayers can have the tax break paid out as a refund even if they don’t owe any taxes.

“We have too many people who are unaware of this tax credit,” said Sen. Jim Beall, D-San Jose. “I would love to have that money in the California economy; by the way, it would really help everybody in California if that money can come back to the state of California.”

California created its own Earned Income Tax Credit in 2015, alongside the federal tax break.

“This important policy only works if people know about it and apply for it,” said Nancy McFadden, executive secretary to Gov. Jerry Brown. “We want to do everything we can to make sure that hardworking Californians who have earned this tax credit get it.”

Brown’s office hosted a media call Wednesday to call attention to the tax credit, and the governor issued a proclamation declaring this week — Feb. 19-25 — as “California Earned Income Tax Credit Awareness Week.”

So far this tax season, state Controller Betty Yee said $65 million in state earned income tax credits have been issued in cash refunds. This year’s tax filing deadline is April 18.

Those interested in learning more about the tax credit and its eligibility requirements can visit caleitc4me.org or text the word “cash” to (760) 970-8396.

People who made less than $54,000 can have their basic income tax returns prepared for free through the Volunteer Income Tax Assistance program. United Ways of California has a website www.myfreetaxes.org that directs filers to places that offer free tax assistance.

“This is about people in California who are under a constant state of economic stress and anxiety, who are constantly worrying how they are going to pay their bills and provide three meals a day for their kids,” said Joe Sanberg, chairman of CalEITC4Me, an awareness campaign. “Many of the recipients of the EITC are literally using this money to provide a third meal a day for their kids.”

Melody Gutierrez is a San Francisco Chronicle staff writer. Email: mgutierrez@sfchronicle.com Twitter: @MelodyGutierrez