San Diego County's low-income residents are missing out on nearly $5.5 million in the state's earned income tax credit, undercutting the program's goal of giving extra cash aid to the state's poorest households.
Those are some of the findings of a report released Wednesday by the California Policy Lab at UC Berkeley. The report compares enrollment data for CalFresh, the state's food assistance program, with tax data from 2017 — the most recent year available — to determine how many households qualified for the tax credit but did not receive it.
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Most of the residents who aren't claiming the tax credit — 66% — are missing out because they did not file a tax return. The remaining third filed a tax return but did not submit the extra form to claim the tax credit. The state generally doesn't require tax returns from single people making less than $12,400 or couples making less than $24,800 — precisely the demographic the tax credit aims to help.
In San Diego County, 47% of CalFresh households that qualified for the state earned income tax credit did not claim it, the report found. Few counties did much better, suggesting the problem of unclaimed tax credits is widespread across the state.
Matt Unrath, a co-author of the report and a research fellow at the California Policy Lab, said the state should expand services like free tax filing assistance to ensure even those who aren't required to file a tax return can still access the aid they're entitled to.
"The households who are most at risk of not receiving this type of assistance are exactly the households that you most want to help," Unrath said. "As the state increasingly relies on tax filing to deliver benefits to low-income Californians, it should pay special attention to the lowest-income families."
In addition, Unrath said, the state could also proactively reach out to residents who did not file a tax return and encourage them to do so. California allows residents to claim up to four years of missed tax credits, which, combined with other state and federal tax credits and COVID-19 stimulus payments that are also tied to tax returns, can be worth thousands of dollars to residents who qualify.
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For those who have filed a tax return but simply did not claim the tax credit, Unrath said the state should proactively send those households amended tax returns so they can claim their money.
"California began offering the CalEITC in 2015 to better support low-income Californians, but it clearly isn't reaching some of the people who could benefit the most from it," Unrath said.
