California Earned Income Tax Credit (CalEITC), CA Form 540, Page 2, line 75

  • CA has a refundable state EITC, maximum of $3,644 in 2024.  Eligibility: 
    • For 2024, the federal AGI must be less than $31,951.
      • The taxpayer (or spouse, if a MFJ return) must be 18 years or older, and there is no maximum age.
        • The taxpayer cannot get CalEITC if they is eligible to be claimed as a dependent on another taxpayer’s return.
      • A taxpayer and/or spouse qualifies even if they have an ITIN.
    • The credit is calculated using earned income.
      • Income from self-employment does qualify as earned income when calculating CalEITC.
      • To count for CalEITC purposes, any income reported on a Form W-2 must be subject to California withholding. That means that the employment must be in California.
  • Filing status cannot be MFS (scope issues). 
    • The taxpayer (and spouse, if filing MFJ) must have lived in California for more than half the year.
    • Investment income, broadly defined, must be less than $4,674 for 2024. 
      • The investment income amount goes on line 4 of the FTB 3514. 
  • FTB 3514, California Earned Income Tax Credit, must be completed and filed with the return.
    • TaxSlayer completes this form automatically. Manual entries on the CA Earned Income Credit (Form 3514) page are needed only if:
      • The IRS or the FTB previously disallowed the taxpayer’s federal or CalEITC (respectively). [This doesn’t disqualify the taxpayer. It just increases the likelihood of an audit.]
      • There is a Medicaid Waiver Payment excluded on the federal return but included for CA EIC.
  • There was prison inmate (incarcerated) income. 
      • There was income from a nonqualified plan. [Such plans are designed for executives and other select employees; if payment is via Form W-2, there is an amount in box 11; if payment was by Form 1099-R, the code in box 7 is probably “D”.]

Young Child Tax Credit, CA Form 540, Page 2, line 76

  • Any taxpayer who is eligible for CalEITC is eligible for the Young Child Tax Credit (YCTC) if they have one or more qualifying children who are under the age of six as of December 31 of the tax year. A Social Security number is not required, but if the child has neither an SSN or an ITIN, then (as with the dependent exemption credit), FTB Form 3568 is required, alternative identifying information must be provided (to prove the existence of the child), and the CA return must be paper filed.
  • As with CalEITC, federal AGI for 2024 must be under $31,951 to receive this credit. However, effective with tax year 2022, the taxpayer does not need to have earned income in order to get this credit.  Effective with tax year 2023, the taxpayer does not need to have any income at all to get this credit.
  • The maximum credit is $1,154 per qualifying child for 2024; TaxSlayer handles this automatically.
  • YCTC information appears in Part VII of CA Form 3514, “California Earned Income Tax Credit.”

Foster Youth Tax Credit, CA Form 540, Page 2, Line 77 

  • This refundable tax credit began in tax year 2022, in the same amount as CA YCTC, above. It is similar to CalEITC and YCTC, and is claimed on FTB 3514, California Earned Income Tax Credit. Unlike CalEITC and YCTC, the credit is available per qualifying individual up to a maximum of 2 children per tax return. 
  • To qualify for FYTC, a taxpayer must meet all of the following requirements:
    • Qualify for CalEITC
    • Be age 18 through 25 at the end of the tax year
    • Have been in foster care at age 13 or older and placed through the California foster care system
    • Satisfy foster care verification requirement x
  • Note: This credit is for former foster children who are filing their own taxes, not for taxpayers who are claiming a foster child as a dependent.
  • Select State Section > California Return > Credits > CA Earned Income & Foster Youth Credit (Form 3514) > Foster Youth Tax Credit, and answer the questions.

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