Date: 01/30/02 References: Sequence: Clerical: Handbook Revision: Distribution:

Transcription

1 Santa Clara County Social Services Agency page 1 Date: 01/30/02 References: Sequence: Clerical: Handbook Revision: Distribution: EIC and Tax Credit Kit This Update is released out of sequence; ok to file. Yes No Common Place Update Distribution List; CWES Distribution List Update : Common Place HandbookUpdate Earned Income Tax Credit (EIC), Child Tax Credit (CTC), Pacific Gas and Electric (PGE), and Southern Bell Corporation/Pacific Bell (SCB) Background THIS UPDATE IS FOR INFORMATIONAL PURPOSES ONLY. At the beginning of every year, Eligibility Workers and CWES staff are provided with an Update that contains information regarding Earned Income Tax Credit (EIC) and are asked to share this information with clients. This year s Update is expanded and includes information regarding: Earned Income Tax Credit (EIC) Child Tax Credit (CTC) Pacific Gas and Electric (PGE), and Southern Bell Corporation/Pacific Bell (SBC). Earned Income Tax Credit (EIC) The Earned Income Credit (EIC) is a special tax benefit for working people who earn low or moderate incomes. EIC was developed for the following reasons: To reduce the tax burden on low income working people To supplement wages, and To make work more attractive than public assistance. Low income working people who qualify for EIC and file a federal tax return can get back some or all of the federal income tax that was taken out of their pay during the year. They may also get extra cash back from the IRS. Even low income working people whose earnings are too small to have paid taxes can get EIC. EIC may also reduce any additional taxes owed.

2 page 2 Update : Common Place HandbookUpdate EIC Payment Amount Single or married people who worked full-time or part-time at some point in 2001 can qualify for EIC, depending on their income. Number of Children Living in the Home Family Earned Less Than... Maximum EIC Amount is... 0 $10,710 $364 1 $28,281 $2,428 2 or more $32,121 $4,008 How To Apply for EIC? The following are guidelines on how one applies for EIC: If the working person was... Then the working person... Raising children in 2001, Must file Form 1040 or 1040A and attach Schedule EIC. NOTE: Working persons with children CANNOT get EIC if they file Form 1040EZ or fail to attach Schedule EIC. Working persons that are married must file a joint return to get EIC. Not raising children in 2001, Can file any tax form, including the 1040EZ. NOTE: These working persons write EIC (or the dollar amount of their credit) on the Earned Income Tax Credit line on the tax form. They do NOT file Schedule EIC. Some helpful tips for a successful return are: A correct name and Social Security Number must be provided for every person listed on the tax return and Schedule EIC. If this information is incorrect or missing, the IRS will delay the refund. While the EIC Schedule must be completed, working persons don t have to calculate their own EIC; if they choose, the IRS will do it for them. Note: Legal non-citizens may apply for EIC. Immigrants who receive EIC are not considered to be Public Charges. Child Tax Credit (CTC) The Child Tax Credit (CTC) is a federal tax credit, worth up to $600 per child in 2001, for families with dependent children under age 17. While CTC has been in effect since 1998, Congress recently made changes in the credit that make it available to millions more low-and-moderate-income working families for the first time, and provides many families a larger CTC than they could have received in the past. The CTC is now REFUNDABLE, meaning families can get the credit even if they owe no income tax. Eligible families can receive the CTC in a refund from the IRS.

3 Update : Common Place HandbookUpdate page 3 Who Can Claim the CTC? To be eligible for a CTC refund, a single or married working person must: Be able to claim a dependent child under age 17 on his or her tax return Have taxable earned income above $10,000, and Have either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). ITINs are issued by the IRS to individuals who are unable to obtain an SSN. Note: Immigrant workers with either type of number may be eligible for CTC. Immigrant workers who receive CTC are not considered to be Public Charges. How Do Families Get a CTC Refund? In order for a family to receive CTC, they must: File a federal income tax return Form 1040 or 1040A, but NOT a 1040EZ. File an Additional Child Tax Credit (Form 8812). This form MUST be attached to the tax return for a family to receive the CTC refund. How Much CTC Can a Family Receive? Eligible families can get up to $600 for each dependent child under age 17 claimed on their tax return. The CTC is used to reduce or eliminate a family s tax liability. Families may be able to get all or part of any remaining CTC as a refund. Volunteer Income Tax Assistance (VITA): A FREE SERVICE Many people who are eligible for the EIC/CTC don t feel comfortable filling out their own tax forms and paying for tax preparation takes away from the family s income. Since people who are eligible for the EIC earn low incomes, it usually doesn t make sense for them to pay for tax preparation when there is another choice: VITA. VITA stands for Volunteer Income Tax Assistance. It is a FREE, IRS-sponsored program to help low-income working persons, including anyone eligible for the EIC/CTC, fill out their tax forms. VITA at the Assistance Application Center A representative from VITA will be outstationed at the Assistance Application Center (AAC) during the months of January and February to be available to: Talk to clients one on one and explain the benefits of applying for EIC and CTC. Assess each client s tax situation to determine which deductions they may be entitled, and

4 page 4 Update : Common Place HandbookUpdate Provide listings of sites where VITA representatives are located to prepare FREE tax returns for persons qualifying for EIC. VITA will also be accompanied by a representative from Economic and Social Opportunities (ESO), who will provide information on the Housing and Energy Services Program. The representatives will be outstationed from 12:00 p.m. until 4:00 p.m. on the following dates in 2002: JANUARY: 22, 24, 29, 31 FEBRUARY: 5, 7, 12, 14, 19, 21, 26, 28. The need to extend the dates into March and April will be assessed in February. Staff will be notified if the decision is made for an extension. Pacific Gas and Electric (PG&E) Discount California Alternate Rates for Energy (CARE) is Pacific Gas and Electric (PG&E) Company s discount for low-income households and housing facilities. CARE provides a twenty percent (20%) discount on monthly PG&E bills and ensures that its CARE customers are not affected by recent surcharges. This program is available to single-family customers with their own PG&E accounts. The following requirements must be met in order for a household to qualify for a 20% discount on their monthly PG&E bill: The client must request the discount from PG&E: via telephone at , or via the PG&E website: < The PG&E bill must be in the client s name. The client must live at the address where the discount will be received. The client must have lived at the address for at least half a year. The client may not share energy meter(s) with another home. The client may not be claimed as a dependent on another person s tax return. The household must meet the CARE income eligibility requirements. Income Eligibility The household s gross income may NOT exceed these amounts: Number of Persons in the Household Total COMBINED Annual Income of ALL Household Members 1 or 2 $22,000 3 $25,900 4 $31,100 5 $36,300 Additional Add $5,200 per person

5 Update : Common Place HandbookUpdate page 5 Southern Bell Corporation/ Pacific Bell (SBC) Discount Southern Bell Corporation/Pacific Bell (SBC) offers Universal Lifeline Telephone Services, which is a program that provides half-price basic service for qualifying low-income customers. The client may choose between two options: Flat Rate Universal Lifeline: This plan allows clients to make unlimited local calls, for a monthly fee at half of the regular price of $10.69, or $5.34. Measured Rate Universal Lifeline: This plan offers clients 60 untimed local calls for a monthly fee of $2.85, with a charge of 8 a minute on every local call after the 60th call. In order for a client to qualify for Universal Lifeline Telephone Services: The client must request the discount from SBC/Pac Bell: via telephone at , or via the SBC/Pac Bell website: < The SBC bill must be in the client s name. The client may not be claimed as a dependent on another person s tax return. The client must meet the Universal Lifeline Telephone Services income eligibility requirements. Income Eligibility The household s gross income must be LESS than these amounts: Number of Persons in the Household Total COMBINED Annual Income of ALL Household Members 1 or 2 $18,800 or less 3 Less than $22,200 4 Less than $26,700 Additional Add $4,500 per person Implementation This Update is for informational purposes only. Staff are expected to share this information with clients immediately upon receipt of this Update. Forms VITA will supply our agency with EIC/CTC literature which includes brochures, flyers, posters, and EIC/CTC kits. The literature will be delivered to District Offices the first week of February. Brochures These brochures will be provided in English and Spanish ONLY: PUB The Tax Break for Hard Working People

6 page 6 Update : Common Place HandbookUpdate PUB Q s and A s on The Earned Income Tax Credit Poster This poster will be provided in English and Spanish ONLY: PUB The Tax Break for Hard Working People Flyer A Give Your Paycheck a Boost flyer will be provided in the following languages: English Spanish Tagalog Vietnamese Cambodian Chinese Bosnian EIC/CTC Kits Each EW Supervisor and CWES Supervisor will receive a EIC/CTC kit. This packet contains explicit information regarding both programs, and is to be shared with their respective units. Listing of VITA Sites A listing of sites where VITA representatives will be located to assist clients complete their income tax returns throughout the tax season is attached to this Update for reference purposes. An additional supply will also be sent to District Offices the first week of February. Treatment of EIC Income EIC payments are exempt as income per: CalWORKs Handbook, Section Food Stamp Handbook, Section 13.21, and Medi-Cal Handbook, Section For EIC payments treated as a resource, refer to: CalWORKs Handbook, Section 15.22, and Food Stamp Handbook, Section Clerical See Forms. Office Management Coordinators (OMCs) must ensure that all VITA literature is displayed in their respective District Office lobby. All VITA literature must be removed on April 16, NELLIE JORGE, DIRECTOR Department of Employment and Benefit Services Contact Person(s): Tomás Dolcini, Program Coordinator, (408)