Words to Know

1

1099: Wages earned by the self-employed or an independent contractor.

A

Adjusted Gross Income (AGI): An individual’s total gross income minus specific deductions. Taxable income is adjusted gross income (AGI) minus allowances for personal exemptions and itemized deductions.

C

CalFile: A simple, easy-to-use service that offers free, direct to government e-filing of your California return. To use CalFile, you must have been a California resident for the whole year.

CalEITC4Me: A statewide campaign dedicated to raising awareness about the benefits of the Earned Income Tax Credit for working families and all Californians. Learn more at CalEITC4Me.org.

California Earned Income Tax Credit (CalEITC): A new cash back tax credit that puts money back in the pockets of California’s working families and individuals with incomes of less than $6,717 (with no dependents) and up to $14,161 (for those with two or more dependents).

D

Dependents (or Qualifying Children): Each child you claim on your tax return must pass the relationship, age, residency and joint return tests to be your qualifying child. 

Direct Deposit: The convenient, fast, easy and free way to get your tax refund directly into your bank or savings account. All you need to complete a direct deposit is your account number and bank’s routing number. 

F

Federal Earned Income Tax Credit (EITC): A cash back tax credit that puts money back in the pockets of the nation’s working families and individuals with incomes of less than $14,820 (with no dependents) and up to $53,267 (for those with three or more dependents).

Filing Status: Based on marital status and family situation, determines your filing requirements, standard deductions, eligibility for certain credits, and your right tax. For example, Single and Married Filing Jointly are filing statuses.

Franchise Tax Board (FTB): The state department that collects state personal income taxes for the State of California and administers the CalEITC.

G

Gross Income: All income you received in the form of money, goods, property, and services from all sources that are not exempt from tax. Gross income does not include any adjustments or deductions.

I

Internal Revenue Service (IRS): The U.S. government agency in charge for tax collection and tax law enforcement and administers the federal EITC.

ITIN: An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. It is a nine digit number that always begins with the number 9 and has a 7 or 8 in the fourth digit, example 9XX-7X-XXXX. ITINs are for federal tax reporting only, and are not intended to serve any other purpose. An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit. ITINs are not valid identification outside the tax system.

P

PATH Act: A new law requires the IRS to hold your federal refund until at least this date for protection against identity theft and fraud, if you claim the Federal Earned Income Tax Credit and/or the Additional Child Tax Credit.

Principal Residence: The main place that a person inhabits. It doesn’t matter whether it is a house, apartment, trailer or boat, as long as it is where you live most of the time. To be eligible for the CalEITC, your primary residence must have been in California for more than half the year.

Q

Qualified Tax Preparer: Any tax expert with an IRS Preparer Tax Identification Number (PTIN) is approved to prepare federal tax returns. However, tax experts have differing levels of skills, training and know-how. All VITA tax preparers are certified as qualified tax preparers.

Qualifying Children (or Dependents): Children you may claim on your tax return based on relationship, age, residency and joint return tests.

R

Refund: The amount of money you get back from filing your tax returns.

Refundable Tax Credit: A cash back tax credit that reduces the amount of tax you owe and may also give you a refund. A refundable, or cash back, tax credit means more money in your pocket.

T

Tax Counseling for the Elderly (TCE): No-cost in-person tax help and free tax filing for individuals over the age of 60, specializing in questions about pensions and retirement-related issues unique to seniors. Open in neighborhoods throughout the state starting February 1.

Tax Day: The yearly IRS tax filing deadline, by which your state and federal tax returns must be filed. The 2016 tax day is Tuesday, April 18, 2017.

Tax Year: The period of 12 consecutive months starting January 1st and ending December 31st of the last year. When you file tax returns in 2017, you will be filling taxes based on income you earned in the 2016 tax year.

V

Volunteer Income Tax Assistance (VITA): No-cost in-person tax help and free tax filing for people with incomes less than $54,000, open in neighborhoods throughout the state starting February 1st.

W

W-2: Shows the amount of income earned and amount of taxes withheld from your paycheck for the year and is used to file your federal and state taxes. You should get this from your employer by February 15, 2017.

Withholding: Federal income tax is paid throughout the year as a “withholding” from your regular pay. The amount is based on the amount you earn and the information you give your employer on Form W–4.