California Earned Income Tax Credit and Self-Employment Income

If you have self-employment income, you can qualify for the CA Earned Income Tax Credit. Here’s how it works.

What is the California Earned Income Tax Credit?

The California EITC is similar to the federal EITC. It provides additional support for low to moderate-income workers.

In order to receive earned income tax credits, you have to have income from work.

The earned income tax credits are generally fully refundable. That means that if you owe $0 in taxes due to your deductions, you can get your tax credit as a tax refund.

Note: You have to file taxes to claim the CalEITC. If you’re not normally required to file a state income tax return, you may want to file one to get your refund.

Who is eligible for the California Earned Income Tax Credit?

In order to be eligible for the California Earned Income Tax Credit, you have to have earned income. Earned income includes:

• W-2 wages, salaries, and tips
• Net income from self-employment

The trick here is that only your net profit on your Schedule C counts. It’s not your gross income.

For example, you received an Uber 1099 form showing $50,000 in income. However, you also wrote off $20,000 in gas and other expenses. Your net income for earned income tax credit purposes is $30,000.

Other requirements for the California Earned Income Tax Credit include:

• Be at least 18 years old or have a qualifying child
• Have earned income of at least $1.00 and not more than $30,000
• Have a valid Social Security Number or Individual Taxpayer Identification Number (ITIN) for you, your spouse, and any qualifying children
• Live in California for more than half the filing year
• Not be eligible to be claimed as a qualifying child of another taxpayer
• Not be eligible to be claimed as a dependent of another taxpayer unless you have a qualifying child

How much is the California Earned Income Tax Credit worth?

Earned Income Tax Credits vary based on your income and family size.

• If you have 0 children, you can receive a maximum of $275
• If you have 1 child, you can receive a maximum of $1,843
• If you have 2 children, you can receive a maximum of $3,037
• If you have 3 or more children, you can receive a maximum of $3,417

Note that the credit scales with your income. It increases up to the maximum amount over your first few thousand dollars in income (varies by your number of children). The tax credit then reduces to $0 as you approach the maximum income.

If you have children under the age of 6, you may also qualify for the young child tax credit.