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Screen CAEIC - California Earned Income Tax Credit (1040)

Overview

California allows a refundable Earned Income Tax Credit for taxpayers who meet certain criteria. Based on information entered on this screen and others, UltraTax CS calculates the EIC - Criteria to Qualify Worksheet to determine if taxpayer is eligible to claim the credit. If taxpayer is eligible, UltraTax CS calculates Form 3514, California Earned Income Tax Credit and the EIC - Calculation of Credit Worksheet. Use this screen to change information and calculations on the form and worksheets.
Based on information provided by the California Franchise Tax Board, UltraTax/1040-California calculates the EIC - Criteria to Qualify Worksheet in order to determine if taxpayer is eligible for the California Earned Income Tax Credit. All filers must meet certain criteria in order to claim the credit, including the following:.
  • Federal AGI Limitation:
     Based on the number of qualifying children in the
    Qualifying children
     statement dialog, federal AGI must be below a certain threshold.
  • Valid Social Security Number:
     Taxpayer (and spouse) must have valid Social Security number.
  • Valid Filing Status:
     Taxpayer cannot use Married Filing Separate filing status.
  • Nonresident Alien Restriction:
     If taxpayer is considered a Nonresident Alien, taxpayer must use Married Filing Joint filing status.
  • Requirement to Live in California:
     Taxpayer (and spouse) must have lived in California for at least half of the year. Although taxpayer (and spouse) are not required to establish California residency, the taxpayer (and spouse) must have lived in California for at least 183 days during the tax year. UltraTax defaults to using residency information entered via Client Properties and information entered on the CANRPY Screen for determining the number of days the taxpayer and spouse lived in California. Use the fields
    Taxpayer lived in California for at least half of
    2023
     and
    Spouse lived in California for at least half of
    2023
     if the residency period does not match the period taxpayer and spouse lived in California.
  • Form 2555 Restriction:
     Taxpayer's federal return cannon include Form 2555 or Form 2555-EZ.
  • Qualifying Child of Another Restriction:
     If taxpayer is not using MFJ status, taxpayer cannot be a qualifying child of another for EIC purposes. If applicable, enter data in the
    Taxpayer could be a qualifying child of another
     field.
  • Investment Income Limitation:
     Investment income cannot exceed $3828. Use the fields in the
    Investment Income
     section of this screen to change calculated values on the EIC - Investment Income Worksheet.
In addition, taxpayer with no qualifying children must meet the following criteria:
  • Age Requirement:
     Taxpayer must be at least age 18 at the end of the tax year.
  • Dependent of Another Restriction:
     If taxpayer is not using MFJ status, taxpayer cannot be claimed as a dependent on someone else's tax return for the current tax year.
UltraTax CS uses information entered elsewhere to determine if taxpayer meets the aforementioned criteria. Enter
1
 in this field to force all of the aforementioned criteria to be met on the EIC - Criteria to Qualify Worksheet or
2
 to indicate that taxpayer does not qualify for the credit. An entry in this field suppresses the calculation and printing of the EIC - Criteria to Qualify Worksheet.
UltraTax CS determines whether or not the taxpayer and spouse lived in California for at least 183 days based on information entered via File and then Client Properties and/or the CANRPY Screen. If the actual time the taxpayer and spouse lived in California does not match the residency period, use these fields to force information reported on the EIC - Criteria to Qualify Worksheet.
Dependent information entered on the federal 1040 Screen transfers to this statement dialog. The amount of California Earned Income Credit is based in part on the number of qualifying children. UltraTax/1040-CA defaults to identifying a dependent in this statement dialog as a qualifying child for the California Earned Income Tax Credit purposes if all of the following criteria are met
  • Dependent has a valid Social Security Number.
  • Dependent is under age 19, a student under the age of 24, or disabled.
  • Relationship qualifies for EIC purposes.
  • Dependent is not married.
  • Dependent lived with the taxpayer in California for at least 183 days. If the
    Days lived w/ Tp
     column is left blank, UltraTax assumes 365 days if
    12
     is entered in the Months in Home column (
    Mos Home
    ) in the
    Dependent information
     statement dialog on the federal 1040 Screen or 183 days if
    6
    ,
    7
    ,
    8
    ,
    9
    ,
    10
    , or
    11
     is entered at the federal level. Otherwise, UltraTax CS assumes that the child did not live with the taxpayer if this column is left blank at the California level.
Per instructions from California Franchise Tax Board, there are exceptions to some of the aforementioned criteria. If an exception applies, use the
Force
 field to designate that a child qualifies or does not qualify for purposes of the Earned Income Tax Credit.
The number of qualifying children is used on the worksheets as a factor in determining eligibility for the Earned Income Credit as well as the amount of credit.
If the taxpayer's filing status is not Married Filing Joint, the taxpayer cannot be a qualifying child (for EIC purposes) of another if claiming the California Earned Income Tax Credit. When calculating the EIC - Criteria to Qualify Worksheet, UltraTax CS assumes that the taxpayer is not a qualifying child of another. Enter
1
 in this field if the taxpayer could be a qualifying child of another and is not using MFJ filing status. UltraTax CS will not calculate an amount for California Earned Income Tax Credit if
1
 is entered in this field when the taxpayer is not using MFJ filing status.
If the
Criteria to qualify (Force)
 field is blank, UltraTax CS prints the EIC - Criteria to Qualify Worksheet and, if applicable, the EIC - Investment Income Worksheet if taxpayer is claiming the California Earned Income Credit. Use this field to force or suppress printing of the worksheets.

Investment Income

The taxpayer may not claim the California Earned Income Credit if investment income exceeds $3828. UltraTax/1040-CA uses amounts from Schedule CA(540), Schedule CA(540NR), Schedule D-1, and Form 3803 to calculate the EIC - Investment Income Worksheet. Use the fields in this section to change amounts reported on the worksheet. The amount of total investment income calculated by the EIC-Investment Income Worksheet is reported on the EIC - Criteria to Qualify Worksheet.

Earned Income

If an address is entered on a unit of the federal C Screen, select the applicable unit in order to automatically fill the Business information fields with data from that corresponding unit.

Foster Youth Tax Credit

Taxpayer or spouse who is age 18-25 and who qualifies for the California Earned Income credit and who also meets the other criteria for Foster Youth Tax Credit may claim the credit on Form 3514.
Use code
1
 or code
2
 to indicate that the taxpayer qualifies for the Foster Youth Tax Credit.
In order to verify eligibility for the Foster Youth Taxpayer Credit, California Franchise Tax Board requires taxpayer to consent to the release of pertinent information by the California Department of Social Services or requires the taxpayer to provide proof of eligibility.
  • To check the box(es) on Form 3514 to indicate that taxpayer and/or spouse voluntarily consents and authorizes the California Department of Social Services to disclose relevant information to the California Franchise Tax Board regarding eligibility for the FYTC, enter
    1
     in this field.
  • If not checking the applicable box(es) on Form 3514 to consent and authorize California Department of Social Services to disclose information, enter
    2
     in this field.
  • If the taxpayer/spouse does not qualify for the Foster Youth Tax Credit, enter
    3
     or leave this field blank.
If not authorizing disclosure of information from the California Department of Social Services, a letter issued by a county or state agency (or other proof) confirming the individual's status as a qualifying foster youth must be submitted to the California Franchise Tax Board. You may use Edit and then Electronic Filing Attachments to include a PDF of such proof with the electronically filed Form 540/540NR return.
If the aforementioned checkboxes are blank and proof of eligibility is omitted from the return, the Franchise Tax Board may deny the credit or otherwise suspend processing of the return until proof is obtained.
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