California Tax Breaks Extended To Undocumented Families

Jul 13, 2020

 


July 15 is the extended deadline to file 2019 income taxes. Next year, some undocumented families will qualify, for the first time, for California’s tax credit program for low income workers. 

The expansion of California’s Earned Income Tax Credit (Cal EITC) is part of the state’s new budget. Not all undocumented workers qualify, only those who have at least one child under the age of six. 

 Tim McManus, a local organizer, calls it an important first step. 

“Particularly with where the economy is at right now. This is just a really critical investment that the state’s making in essential workers,” said McManus, an organizer with the Industrial Areas Foundation. IAF is a national network of faith and community-based organizations. The local affiliate, spanning Monterey, San Benito and Santa Cruz Counties is called COPA

According to IAF, tens of thousands of undocumented workers across the state will benefit. 

“The Monterey Bay region… we have a significant number of families who will qualify for this, who file their taxes every year, using their ITIN number, who have young children,” McManus said. 

Previously, undocumented workers did not qualify for Cal EITC because it required a Social Security number. However, many undocumented workers file their taxes using an ITIN, an individual taxpayer identification number. ITIN filers contribute $3.2 billion in state and local taxes, according to the California Immigrant Policy Center

The new state budget expands eligibility to ITIN filers who have a young child. Those families will qualify for two tax credits: the California Earned Income Tax Credit and the Young Child Tax Credit. Depending on the family’s situation, those credits could total up to $2,600.

Advocates call it a victory, considering the budget’s $54 billion shortfall. In fact, Governor Gavin Newom’s budget proposal in May did not include these tax breaks for undocumented workers. The program expansion is estimated to cost the state around $65 million.  

State Senator Bill Monning credits the reversal to community organizing. 

“And it’s really a commonsense commitment in our budget because it puts money back in the pockets of those who have earned it and are paying state taxes,” Monning said. “I’ve said before, the status quo was kind of taxation without representation.”

 

Monning said the expansion will help essential workers on the frontlines of the pandemic and the state’s economy. 

“It will put more money into the hands of local merchants and, most importantly, it will put money into the hands of hardworking, essential workers who right now are really on the ropes,” Monning said. “They’re putting themselves at risk and their families at risk.”

The state senator says the next step is to inform undocumented workers about the change. Advocates say they’ll keep fighting to expand the program to all undocumented workers, something Colorado recently passed.