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The Basics
People who live with disabilities often have less income and fewer assets than the rest of the population. Living on public benefits programs can make it harder to save money, but there are tools available to help you.
Savings programs like ABLE accounts, Individual Development Accounts (IDAs) and the career development program Plan to Achieve Self-Support (PASS) can help you achieve your goals without risking the public benefits income you live on. You can also take advantage of tax credits and free tax filing help that may save you a lot of money, even if you only have a small amount of taxable income.
ABLE accounts let people who have disabilities that began before they turned 26 keep money in a special tax-advantaged account. The first $100,000 in an ABLE account does not count against the $2,000 Supplemental Security Income (SSI) resource limit, and none of the money in an ABLE account counts for Medi-Cal or CalFresh (formerly Food Stamps).
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Why Assets Matter
People who live with disabilities often have less income and fewer assets than the rest of the population. If you depend on public benefits programs, it can be hard to think about saving money for the future. If you live only on the money you get from Supplemental Security Income (SSI) you will be below the poverty level. Many other programs have asset limits that make it hard to save money.
It can seem like public benefits programs are a trap; they don’t give you enough money to cover all your expenses and they restrict your options for building assets and making more money. And, if you want to make a change in your life, it can be hard to try and follow all the rules that you need to in order to keep your benefits.
Building assets is an important part of becoming financially independent. Even if you face obstacles that make it hard to save money, building assets should be a priority. If you don’t have assets, it is much harder to become economically secure.
Assets give you an economic cushion and open the door to more opportunities. Careful planning can make it possible to build wealth, buy a home, or start a business, while still having enough money to live on. The economic stability that comes with assets can help you meet your goals, let you work toward freedom from dependence on benefits, and increase your wealth.
- To help you pay for unexpected expenses and help you make it though emergencies
- To help you meet a specific goal like buying a home or car, or paying for school
Financial Literacy
Developing a general understanding of finances (or “financial literacy”) and skills such as budgeting and long-term financial planning is important for everyone. But it is especially important if you have to follow the low-income and asset rules of public benefits programs.
Learning about finances can help you do big things like pay for college, buy a house, or plan for old age. It can also help you stay away from scams and prepare for unexpected expenses and difficult life events.
There are several reasons financial literacy is especially important for people with disabilities:
- People with disabilities have higher out-of-pocket costs for everyday activities
- People with disabilities can have high medical costs (and medical debt is a major cause of bankruptcy for all people)
- Relying on public benefits programs is hard. There are a lot of rules and restrictions about money and assets that most people don’t ever have to think about
Learn more
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Get SSI and want to save up money for a work-related goal? See how a PASS can help.
Getting Past the Myths: The Truth About Working
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Building Your Assets and Wealth
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ABLE Accounts
If you have a disability that meets Social Security’s standards (there are separate disability standards for children or youth, for adults, and for blindness) and your disability began before you turned 26, you can open an ABLE account. An ABLE account is a financial account that can help you:
- Build assets in an account that has tax advantages. Your investments in an ABLE account won’t be taxed, so your wealth will grow faster. Plus, If you work and save earned income in your ABLE account, you may qualify for the federal Saver’s Credit.
- Use your savings on many types of expenses. There are rules about spending the money in your ABLE account, but there’s also a lot of flexibility.
-
Save up money without losing benefits. Many benefits programs have resource limits, but:
- You can have up to $100,000 in your ABLE account and keep getting Supplemental Security Income (SSI) benefits, as long as you meet all other SSI rules. If you go over $100,000, SSI benefits will stop, but they will start up again if your ABLE account drops back below $100,000 and you won't have to reapply.
- For Medi-Cal and CalFresh, the money in your account will not affect your benefits, no matter how much you have.
- The money in your ABLE account may not be counted for some other benefits. Check with program representatives to make sure.
The bottom line: An ABLE account means that you can save up money without losing your benefits. It also lets family and friends give you money without affecting your benefits.
Note: When you die, if your estate goes through probate the money in your ABLE Account might be used to repay certain types of Medi-Cal expenses. Learn more about Medi-Cal Estate Recovery.
Opening an ABLE Account
There are a few main rules for opening an ABLE account:
-
You can only open an account through a state-designated program or institution.
- California's ABLE account program is CalABLE.
- You can choose to open an account in another state’s ABLE program.
- You can only open one ABLE account. (You cannot open accounts in more than one state.)
-
You must have a disability that qualifies for an ABLE account and that began before you turned 26.
- You can be more than 26 years old when you open your account – all that matters is when your disability began.
You can only have an account if you have a disability. However, another person, such as a parent or guardian, can help manage the account.
To open an ABLE account, you must have a disability that began before you turned 26 and meets Social Security Administration standards. (SSA has different standards for children, for adults, and for blindness.)
You definitely qualify for an ABLE account if you get benefits like Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Childhood Disability Benefits, Medi-Cal (based on your disability), or Medi-Cal's Working Disabled Program, because they all use SSA's disability standards.
If you don’t get disability-based benefits, you can “self-certify” that your disability meets SSA’s standards. For self-certification, you must have documentation verified by a doctor that shows your disability meets SSA standards with one difference: instead of limiting your earnings, you must show that your disability causes "marked and severe functional limitations." Roughly speaking, that means your disability must be on Social Security’s List of Impairments or be at least as severe as an impairment on that list. Conditions on Social Security's list of Compassionate Allowances Conditions also usually qualify.
Keep your disability documentation in a safe place, because the Internal Revenue Service (IRS) might ask to see it.
Comparing State ABLE Programs
Some states offer ABLE accounts and others don’t. California's ABLE account program is CalABLE. Even if your state has an ABLE program, you should compare different state ABLE account programs to see which state’s program is best for you.
When you compare ABLE programs, think about these questions:
- How easy is it to put money in the account and take money out for qualifying expenses? For example, does it come with a debit card?
- How good is customer support? Try calling the program to see whether it seems helpful.
- What investments does it offer? Each state program offers different investment options. Choose a program that offers investments matching your needs.
- What fees does the program charge? There may be fees for opening the account and for keeping money in it.
- Does the program offer any extra benefits for people living in your state? For example, some state programs offer extra tax benefits for residents of that state.
Note: You can switch your ABLE account from one state program to another. You do not have to stick with the state program you choose.
Compare the ABLE account options in different states.
Rules on Depositing Money in an ABLE Account
There are two limits on how much can be put in an ABLE account in a calendar year:
- Up to $17,000 from any source (including your family and friends, your benefits, and other unearned income)
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Another $13,590 from your own earned income (if you have a job).
- Note: If you or your employer make contributions to a retirement plan set up by your employer, you might not qualify for the extra ABLE contribution amount based on having a job (you can still make regular ABLE contributions). If you aren't sure about this, ask your ABLE account program or check with a tax expert. Get more information about this rule from the ABLE National Resource Center.
Note: This means that if you earn $13,590 or more, you could have a total of up to $30,590 go into your ABLE account in a year. If you earn less than $13,590, the amount you could contribute would be lower.
Important: You need to keep good records, to make sure that too much money isn’t put into your account.
Sam gets SSI and Medi-Cal benefits. He doesn’t work, so he has no earned income. Sam’s mother helps him by putting $500 a month into Sam’s ABLE account. Sam’s done the math and knows that by the end of the year, his mother will have deposited a total of $6,000. Sam’s brother also helps out, by making a big $5,000 deposit into Sam’s ABLE account in February. Combined, his mother and brother will put $11,000 into Sam’s ABLE account over the course of the year. For the rest of the year, the most Sam or anyone else deposits can only add up to $6,000. Even if Sam spends $10,000 on qualified expenses by November and the balance in his ABLE account drops, only $6,000 can be added to the account until the end of the year.
State ABLE programs also have limits on the total amount in your account — typically $200,000 to $500,000, depending on the state. For example, a state program might say that if you have $400,000 in your ABLE account, you cannot deposit any more money.
Rules on Spending Money in an ABLE Account
The money in an ABLE account has to be used for certain qualifying expenses, like:
- Daily living expenses
- Education
- Housing
- Transportation
- Help getting and keeping work
- Health care
- Assistive technology
- Legal fees
- Financial management fees, and
- Other approved expenses.
Many expenses qualify. For example, your rent, electric bill, and furniture are housing expenses. Gasoline and car repairs are transportation expenses. Health insurance premiums and copayments count as health care. Lunch at a restaurant, toothpaste, and toilet paper are daily living expenses.
Keep receipts whenever you use your ABLE account to pay for a qualifying expense. If you are audited by the IRS, you’ll need to show them how you’ve used your money. You can put all of the receipts into a binder or scan them and save them on your computer.
How Spending Works
An ABLE program may offer a debit card that is linked to the account. If so, you can use the debit card whenever you pay for a qualifying expense. For things like rent, you may need to write checks or withdraw cash from the account instead. You don't need authorization to spend your money: it's your job to make sure your expense qualifies and to keep records of how use your ABLE account.
If you withdraw cash from an ABLE account, spend it on your qualifying expense. Don’t just hold onto the money or put it in a normal bank account – if you don’t spend the money, it could be counted as a resource for benefits programs. For example, if you take $3,500 out of an ABLE account and put it into a regular checking account instead of spending it, you will go over the resource limit for SSI.
As long as the money stays in the ABLE account, it won’t affect your benefits, so leave your money there until you need to spend it.
Learn more about ABLE accounts.
If you already have a Special Needs Trust, it’s a good idea to open an ABLE account as well, because trusts and ABLE accounts have different advantages.
Advantages of ABLE accounts:
- Provides tax benefits (as long as any money withdrawn is spent on qualified disability expenses)
- Easier (and cheaper) to open
- Easier to use the money in the account
- The person with a disability has more control over the account
- Money from an ABLE account used for housing expenses doesn't make SSI benefits go down
Advantages of Special Needs Trusts:
- No limits on contributions
- Does not require that your disability began before you turned 26
- The money in a Special Needs Trust does not have to be spent on qualified disability expenses
The bottom line: Because of the limits on how much can be put into an ABLE account each year, you cannot replace a trust with an ABLE account. Instead, use them both as part of your overall asset-building strategy.
-
You can put up to an extra $13,590 of your earnings into your account (on top of the regular $17,000 that is allowed). The $13,590 must be from your own earnings – it cannot be contributions from others or money you get from benefits or other unearned income.
- Note: This means that if you earn $13,590 or more, you could have a total of up to $30,590 go into your ABLE account in a year. If you earn less than $13,590, the amount you could contribute would be lower.
- You may qualify for the Saver’s Credit when you file your federal taxes.
- You have to make sure that too much money isn’t contributed into your account (even if it is other people making the deposits). Check with your ABLE program if you have questions about this.
Learn more
PASS Estimator
Get SSI and want to save up money for a work-related goal? See how a PASS can help.
Getting Past the Myths: The Truth About Working
Get the facts about how benefits support work.
Programs That Support Work
Learn about programs that can help you prepare for and find work.
Building Your Assets and Wealth
- The Basics
- Why Assets Matter
- ABLE Accounts
- Individual Development Accounts
- Other Asset-Building Programs
- Tax Credits and Tools
- Trust Funds
- FAQs
- Pitfalls
- Resources
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Individual Development Accounts (IDAs)
Individual Development Accounts, also known as “IDAs,” are special savings accounts. You choose a goal to save for and use the IDA account to save money towards meeting that goal. IDA goals are usually buying a first home, education or training costs, or funding for a small business.
The money you put into the account will be matched by other sources. The match may be anywhere from one to four times the amount of the deposit you make. For example, if you’re enrolled in an IDA program with a 2:1 match and you deposit $50 into your account, the program will add an additional $100 towards your savings goal.
There are more than 250 IDA programs nationwide. Their eligibility requirements can be different. Generally, to qualify for an IDA:
- Your annual income must be within 200% of the Federal Poverty Level ($29,160), and
- You must have some form of earned income.
Once you’re enrolled in the program, you also need to take financial education classes.
To research and find an IDA program in California, check out the DB101 list of IDA resources and the Prosperity Now IDA directory.
Funding Sources
Funding for IDAs comes from a variety of places, including government agencies, private companies, non-profits, and individual people.
If you are getting Supplemental Security Income (SSI) and/or Medi-Cal benefits and plan to enroll in an IDA, it is very important that you find out the funding source for that IDA program:
- If you enroll in a nonfederally funded IDA (for example, one funded by a nonprofit or private company), money deposited and matched in your IDA may put your SSI or Medi-Cal benefits at risk.
- But if you enroll in an IDA program that is federally funded through Temporary Assistance for Needy Families (TANF) or the Assets for Independence Act (AFIA) block grants, money deposited won't be counted as a resource and a portion of it will be excluded from income for SSI or Medi-Cal.
If you are on SSI or Medi-Cal, it is highly recommended that you enroll in a TANF or AFIA funded IDA, rather than one funded by some other source, so that you don’t risk losing your benefits.
Program Eligibility
Each IDA program is different and eligibility requirements may vary from program to program. Most require that:
- Your annual income is within 200% of the Federal Poverty Level ($29,160 for an individual, $39,440 for a couple), and
- You have earned income.
For an AFIA- or TANF-funded IDA, you must have income from work. It doesn’t matter if you’re working full-time or part-time, but you must be earning income from some sort of job. IDAs that are funded by other sources may have slightly different earned income requirements and allow for income from other sources.
Citizenship Requirements
IDA programs funded by the federal government may check on your citizenship or legal residency status when you apply. IDA programs funded by other sources may or may not do this. Be sure to ask about specific citizenship requirements when looking at IDA programs.
Financial Literacy Training
Once you’re enrolled in an IDA program, you must take their free financial literacy training. Financial literacy programs improve your ability to manage your personal finances, save more money, and do financial planning.
This training usually covers topics like:
- Money
- Debt reduction
- Developing a savings plan
- Credit, and
- Investing.
IDA Savings Limit
Most IDA programs only let you save a limited amount of money in your account, usually $4,000 to $6,000. This includes the money you deposit, as well as the matching funds. Once you reach the limit, you won’t be allowed to deposit any more money into the account. IDA programs also have a limit on how long you can save, usually 2 or 3 years.
How to Apply
If you are interested in starting an IDA, contact an IDA program in your area, search the Prosperity Now IDA directory. Ask if the IDA program you are interested in is accepting applications. Some programs may have waiting lists. Even if they do, you may be able to start by taking financial literacy training while waiting for a space to open up. You can also look at the DB101 list of IDA resources. There aren't as many IDA programs as there used to be. Some are still active, but it can take a bit of effort to find one that is accepting applications.
Note: There aren't as many IDA programs as there used to be. Some are still active, but it can take a bit of effort to find one that is accepting applications.
- You need to decide what goals you are trying to meet with your IDA.
- You need to find an IDA program in your area. You can use the IDA Directory to find one near you.
- You need to find out as much as you can about the IDA program you are thinking about, like:
-
Where does the program’s funding come from?
- Is it federally funded through Temporary Assistance for Needy Families (TANF) or the Assets for Independence Act (AFIA)?
-
What goals does the program fund?
- AFIA- and TANF-funded IDA programs only let you save for small business development, higher education expenses, and buying a first home.
- Privately funded IDAs may let you save for other goals like buying a new computer or car.
Once you find an IDA program that fits your needs, you should go to an orientation meeting to learn more about it.
You will also need to provide information to prove your eligibility for the program. If you get into the program, you will have an IDA caseworker who will help with your account. You’ll open a savings account with a bank or credit union that is connected to your IDA program. Depending on the program, you may need to deposit a certain amount into your account each month.
Once you’ve reached your savings goal, you can take money out of the account to spend on your goal.
Integration with Other Benefits Programs
IDAs, Supplemental Security Income (SSI), and Medi-Cal
Because SSI and Medi-Cal have income and asset limits, working and saving money in an IDA account could risk your eligibility for those programs. Be sure to find out about the funding source before you enroll in a certain IDA:
- If you enroll in an IDA program that is federally funded via Temporary Assistance for Needy Families (TANF) or the Assets for Independence Act (AFIA), you don’t need to worry about losing your benefits. Money deposited won't be counted as a resource and a portion of it will be excluded from income for SSI or Medi-Cal.
- If you enroll in an IDA program that is funded by some other source, money deposited into your IDA may be counted as a resource and you could lose your SSI and Medi-Cal benefits.
If you are on SSI and Medi-Cal, you should enroll in an AFIA- or TANF-funded IDA.
When you enroll in a TANF- or AFIA-funded IDA, ask your IDA caseworker to write a letter saying that you can be in the IDA program without losing your SSI benefits. The letter should mention the “Exclusions Under Other Federal Statutes” clause. Take that letter to Social Security, give a copy to the county to protect your Medi-Cal eligibility, and keep a copy of it for yourself.
IDAs and Plans to Achieve Self-Support (PASS)
A Plan to Achieve Self-Support (PASS) is an SSI program that lets you set aside money for a specified work goal, such as:
- Starting a new career
- Going back to school
The money you set aside in a PASS does not count against SSI's income and resource limits. This means you can save money towards a career goal in a PASS and continue to use SSI benefits for basics like food and rent.
An IDA can be a part of your PASS plan; the only requirement is that your goal for each program be the same. One of the benefits of using the 2 together is that it lets you to set up a non-federally funded IDA without risking your SSI or Medi-Cal benefits.
As long as the money you save in your IDA is part of a PASS plan, it will not be counted by SSI or Medi-Cal and won’t jeopardize those benefits.
IDAs and Social Security Disability Insurance (SSDI)
People on SSDI can enroll in any IDA program they choose. There are no restrictions.
One thing to consider though, especially if you’re using an IDA to fund a small business: As your earned income increases, and particularly as you start earning above Social Security's Substantial Gainful Activity (SGA) level ($1,470/month for individuals in 2023), SSDI’s work rules will apply and your SSDI benefit may be affected. For details on how working can affect your SSDI, read DB101’s section on SSDI and Work.
IDAs and the Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) is a federal tax program that lowers the amount of income tax owed by low- to moderate-income workers and families. Money you get from an EITC can be put into an IDA and matched, helping you to reach your savings goal faster.
Learn more
PASS Estimator
Get SSI and want to save up money for a work-related goal? See how a PASS can help.
Getting Past the Myths: The Truth About Working
Get the facts about how benefits support work.
Programs That Support Work
Learn about programs that can help you prepare for and find work.
Building Your Assets and Wealth
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Other Asset-Building Programs
Plan to Achieve Self-Support (PASS)
Social Security’s Plan to Achieve Self-Support (PASS) program lets you save money without lowering your income. Usually, if you get SSI monthly cash benefits, your SSI benefits go down when you get income from other sources, like a job or Social Security Disability Insurance (SSDI).
If you are in this situation, you probably have to spend a lot of your monthly income on basic expenses like food and housing. This can make it hard to save for things like job training or school.
The PASS program helps make saving easier. It lets you save money for a work-related goal that will help you achieve self-sufficiency. It is easy to use because it protects your income while you save.
You can use a PASS to:
- Help pay for the cost of school or training
- Start a business
- Pay for equipment, support services, and other expenses related to your goal
One of the things that make PASS unique is that it is completely consumer-driven. The PASS plan is about your work goal, what you want to achieve, and what you need to get there.
After you write your PASS, you ask Social Security to approve it. Your plan has to have a realistic goal given your abilities, experience, and educational background.
- Be on SSI, or become eligible for the SSI program as a result of an approved PASS application
- Have a source of income other than SSI (for example, SSDI cash benefits or wages from a job), or have assets over $2,000 that you can use to fund your PASS plan. (If you are not eligible for SSI because of the limit on assets, you may be able to move those assets into a PASS and become eligible)
- Have a work goal that will help you earn enough money to lower your Social Security disability benefits, or get off benefits altogether
- Be able to write down a plan that shows how saving a certain amount of money will let you reach your work goal. Social Security has staff called PASS Cadre who can help you write your PASS plan
- Be under age 65. You may be able to set up a PASS if you are 65 or older, if you were getting a SSI cash benefits based on disability or blindness in the month before your 65th birthday
If you already go to college or have a job, you may be able to set up a PASS to help pay for your current work, school, or health expenses.
Income Sources for Funding a PASS
Once you have an approved PASS plan, you will put money into your PASS account to pay for each step along the way to reaching your goal.
You cannot put any money you get from SSI in your PASS account. You must use money from some other source such as income from a job, or money from a spouse or parent.
Applying to the PASS Program
There is a detailed description of how to set up a PASS in the DB101 PASS section. You have to fill out Social Security’s PASS application form. On the application you will describe your goals for work and how you plan to achieve them.
This description should be detailed enough to convince Social Security that:
- You have a clear plan
- The plan is something you can realistically do, and
- If you completed the plan your need for SSI or SSDI would be lowered or eliminated.
Application Assistance
Creating your plan and filling out a PASS application can seem intimidating, but you can get help with every step of the process by talking with a PASS Cadre. A PASS Cadre is a professional who knows about the program and is available to help you take advantage of it. To find a PASS Cadre, click here.
Using a PASS
After your plan is approved, Social Security will send you detailed instructions about how to use your PASS. The instructions are mostly about keeping pass funds and expenses separate from your other money, and keeping good records. You have to follow the rules carefully. To learn more, see DB101's PASS section.
If a medical situation or some other issue comes up that impacts your ability to continue your PASS, talk to your PASS Cadre about your options. In many cases, you will be allowed to put your PASS plan on hold for up to 12 months without having to reapply.
Family Self-Sufficiency (FSS) Program
The Section 8 Housing Choice Voucher Program helps people with low income have affordable housing. It is funded by the federal government and run by local public housing authorities (PHAs).
A family that gets Section 8 benefits pays 30% of the family income for rent. The Section 8 program pays for the rest of the rent. After a family's income goes up, the amount the family has to contribute to rent also goes up, because 30% of their income is more than it used to be. When the family contributes more for rent, the Section 8 program contributes less. Note: Families that include a person with a disability who works may qualify for the Earned Income Disregard and not have to pay more rent (see below).
Section 8's Family Self-Sufficiency (FSS) program helps families whose income goes up. When the family income goes up and the Section 8 program starts paying less for rent, the Section 8 program takes the money that it saves on rent and sets it aside for the family. The family can use these savings for purchases, such as the down payment on a home or a car.
Learn more about the FSSL. Find public housing authorities near you.
Clyde and Bertha live with their two children and have $500 in monthly income. Due to their low income, they qualify for the Section 8 program. With Section 8, they pay just $150/month in rent (30% of $500), even though their apartment costs $1,000/month. Section 8 pays the remaining $850/month.
Bertha starts doing some childcare work and the family income goes up to $1,000 each month. Now, they have to pay $300/month as rent (30% of $1,000), while Section 8 pays the remaining $700/month for the family's apartment, $150 less per month than the program used to pay.
Because the family is part of the FSS program, the PHA that administers Clyde and Bertha's Section 8 benefits takes that $150 each month and sets it aside for the family. A year later, there is $1,800, which Bertha can use to make the down payment on a car.
The Earned Income Disregard (EID) helps people with disabilities who work and get housing benefits such as:
- Section 8
- Public housing
- HOME Investment Partnerships Program, or
- Housing Opportunities for Persons with AIDS (HOPWA).
With the Earned Income Disregard, if you get a job, the money you make at your job won’t be counted by your public housing authority (PHA) for the first year after you start working. That means your rent won’t go up. During the second year after you start working, only half of your work income will be counted, so your rent won’t go up as much as it otherwise would. After the second year, your entire income will be counted by the program.
Talk with your public housing authority (PHA) to see if the EID can help you.
Learn more
PASS Estimator
Get SSI and want to save up money for a work-related goal? See how a PASS can help.
Getting Past the Myths: The Truth About Working
Get the facts about how benefits support work.
Programs That Support Work
Learn about programs that can help you prepare for and find work.
Building Your Assets and Wealth
Try It
Tax Credits and Tools
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) is designed to help people with low income by lowering the amount of federal income tax they owe. Even if you don’t earn enough money to owe federal income taxes, you may be able to get an EITC.
Note: There is also an Earned Income Tax Credit for California state income taxes. The California Franchise Tax Board has more information about the state EITC.
Eligibility
To qualify, you must have income from employment, self-employment, or employer-paid disability benefits that is below certain limits and you must file your federal taxes.
The amount you get from your EITC depends on your Adjusted Gross Income (AGI), whether you are married, and the number of children you have. For 2023 (filing taxes by April 2024), the EITC ranges from $2 to $7,430.
|
No Children |
1 Qualifying Child |
2 Qualifying Children |
3 or More Qualifying Children |
---|---|---|---|---|
Single |
AGI limit: $17,640
Max credit: $600
|
AGI limit: $46,560
Max credit: $3,995
|
AGI limit: $52,918
Max credit: $6,604
|
AGI limit: $56,838
Max credit: $7,430
|
Married (filing jointly) |
AGI limit: $24,210
Max credit: $600
|
AGI limit: $53,120
Max credit: $3,995
|
AGI limit: $59,478
Max credit: $6,604
|
AGI limit: $63,698
Max credit: $7,430
|
* Figures are for tax year 2023 (filing by April 2024). |
General requirements:
- You must meet adjusted gross income requirements (see table above).
- You must have earned income from employment, self-employment or employer-paid disability benefits that you got before retirement.
- You must have a Social Security Number valid for employment.
- You cannot file your taxes as “married filing separately.” If you’re married, you must file a joint tax return.
- You must be a U.S. citizen or resident alien. If not, you must be married to a U.S. citizen or resident alien and filing a joint tax return.
- You must live in the U.S. for more than half of the year.
Age Requirements:
- If you are claiming qualifying children, you can be any age.
- If you’re not claiming a qualifying child, you must be 25 to 64 years old.
Additional requirements:
- You cannot claim foreign income or a foreign housing deduction using Form 2555.
- You must not have investment income that exceeds $11,000 (for 2023)
- You cannot be the dependent of another person.
- You cannot be the qualifying child of another person.
Earned Income
To qualify for an EITC, you must have earned income. This can include your wages, salaries, tips, net earnings from self-employment, or any other form of taxable pay. You can also elect to include nontaxable combat pay as earned income.
The EITC program considers employer-paid disability payments that you get before retirement earned income. But benefits payments from a policy you paid the premiums for, or that you got after retirement, would not be considered earned income.
Other things that do not qualify as earned income under the EITC include:
- Interest and dividends
- Social Security and railroad retirement benefits
- Pensions and annuities
- Alimony and child support
- Workers’ compensation benefits
- Unemployment compensation
- Welfare benefits
- Veterans benefits
If you are married and filing jointly, at least one spouse must have earned income to be eligible for an EITC.
Adjusted Gross Income and Qualifying Children
In addition to the earned income requirement, you must have an adjusted gross income (AGI) below certain levels to qualify for an EITC.
Your adjusted gross income (AGI) includes all earned income before deductions for taxes, health care or other expenses, minus certain business, education-related, and other expenses. While filling out your annual tax return (IRS Form 1040), you will be asked a series of questions that will let you determine what your AGI is.
John earned $30,000 in wages for the year, before taxes and other deductions were taken out of his paychecks. He also earned $4,000 in employer-paid disability insurance payments for the year. He had no deductions for business, education-related, or other expenses.
According to the EITC program, John’s adjusted gross income would be $34,000—his gross wages plus payments he got from the employer-paid disability insurance.
For a child to be considered a qualifying child under EITC, several requirements must be met:
- Relationship: If you are claiming one or more child, they must be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these (for example, your grandchild, niece, or nephew).
- Residence: The child must live at the same residence as the taxpayer for more than half the year and have a valid Social Security number.
- Age: At the end of the tax year, the child must be under 19. Or, if going to school full-time, the child must be under 24. The only exception is for people who are permanently and totally disabled. If the taxpayer’s child is permanently and totally disabled, there is no age requirement.
According to the IRS, a person is considered “permanently and totally disabled” if their condition is expected to last continuously for at least one year or is expected to result in death, and if they cannot perform any Substantial Gainful Activity (SGA). For tax year 2023, this means they cannot work and earn more than $1,470 per month ($2,460 if you are blind).
Note: Qualifying children can only be used by one family member to claim an EITC.
How to Get an EITC
If you qualify, you will claim your Earned Income Tax Credit when you file your federal tax return, IRS Form 1040. If you have a qualifying child, be sure to attach a Schedule EIC.
To calculate the value of your EITC, you can use the Earned Income Credit Worksheet in your 1040 instruction booklet. Or you can ask the IRS to calculate it for you by noting an “EIC” on the Earned Income Credit line on your tax return.
To figure out whether or not you are eligible for an EITC, and to see what the value might be, use the IRS EITC Assistant.
Tax Preparation Tips for Claiming the EITC and Advanced EITC
Keep all your W-2's and keep a record of who you have worked for during the year. This will make things simpler when it comes time to file your taxes.
If you are on a limited income, do not pay someone to do your taxes. Instead, use a Volunteer Income Tax Assistance (VITA) Center to file. Most centers can e-file your return for free. If you are self-employed, have all your receipts and a log of expenses ready for the tax preparer.
Be sure to file your taxes, even if your income is lower than the amount at which you are legally required to file. You might be eligible for an EITC or some other tax credit that you can’t get without filing. Many families with children who qualify for an EITC may also be eligible for a Child Tax Credit (CTC).
The following is a summary of the EITC requirements:
Requirements |
Single Person without Qualifying Child |
Single Person with at least one Qualifying Child |
---|---|---|
Adjusted Gross Income |
$17,640 for a single person $24,210 for married couple |
One qualifying child: $46,560 for a single person $53,120 for married couple Two qualifying children: $52,918 for a single person $59,478 for married couple Three or more qualifying children: $56,838 for single individual $63,698 for married couple |
Social Security Number |
Social Security Number valid for employment |
Social Security Number valid for employment |
Tax Status |
Joint tax return if married, unless separated for more than six months |
Joint tax return if married, unless separated for more than six months |
Citizenship |
Must be a U.S. citizen or legal resident. Or if you’re a nonresident alien, you must be married to a U.S. citizen or legal resident and filing a joint tax return |
Must be a U.S. citizen or legal resident. Or if you’re a nonresident alien, you must be married to a U.S. citizen or legal resident and filing a joint tax return |
Foreign Income |
Cannot claim foreign income or a foreign housing deduction using Form 2555 |
Cannot claim foreign income or a foreign housing deduction using Form 2555 |
Investment Income |
Cannot have investment income that exceeds $11,000 |
Cannot have investment income that exceeds $11,000 |
Earned Income |
Must have earned income |
Must have earned income |
Relationship |
Does not apply |
The child must be the taxpayer’s son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendent of any of these (for example, grandchild, niece, or nephew) |
Age |
Adult: Must be 25 to 64 years old |
Adult: No age requirements Children: Under age 19 at end of the year Under age 24 at the end of the year and a full-time student, or Any age if permanently and totally disabled |
Residency |
Must live in the U.S. for more than half of the year |
Must live in the U.S. for more than half of the year |
Qualifying Child |
Cannot be the qualifying child of another person |
Must have at least one qualifying child Each qualifying child can only be used by one family member |
Dependent Child |
Cannot be the dependent of another person |
Cannot be the dependent of another person |
Tax Forms |
1040 To have IRS figure the amount of your credit, enter “EIC” on the Earned Income Credit line of your tax form |
1040 AND Schedule EIC To have IRS figure the amount of your credit, enter “EIC” on the Earned Income Credit line of your tax form |
Interaction With Other Disability Benefits Programs
Supplemental Security Income (SSI), and Social Security Disability Insurance (SSDI)
You must have some form of earned income to qualify for an EITC. Social Security benefits do not count as earned income under the program. You can, however, be on SSI or SSDI and claim an EITC, as long as you have some form of earned income.
Individual Development Accounts (IDAs)
Money from an EITC can be put into an Individual Development Account (IDA). This lets you get matching funds from the IDA program sponsor.
Plans to Achieve Self-Support (PASS)
Money from an EITC can be set aside in a PASS. This will let you reach your employment goals more quickly, by saving money without affecting the way your income is counted.
Long-Term Disability Insurance
Employer-paid long-term disability insurance benefits that you got before retirement count as earned income under EITC and can therefore be used to qualify for the program. Disability insurance benefits which you pay the premiums for, or that you get after retirement, are not considered earned income and can’t be used to qualify for an EITC.
Volunteer Income Tax Assistance Program (VITA)
The IRS Volunteer Income Tax Assistance Program (VITA) offers free tax help for taxpayers who qualify.
The VITA Program offers free tax help to low- to-moderate income (generally, $60,000 and below) people who can’t prepare their own tax returns. Certified volunteers are available to help prepare your taxes and they will make sure you get special credits, such as Earned Income Tax Credit, Child Tax Credit, and Credit for the Elderly or the Disabled. In addition to free tax return preparation assistance, most sites also offer free electronic filing (e-filing).
VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. To locate the nearest VITA site, visit this website or call 1-800-906-9887.
Child Tax Credit (CTC)
The Child Tax Credit (CTC) is available to parents with children under age 17. CTC can give these parents up to $2,000 tax credit for each child in the family under 17. Eligible families must be working and earning at least $2,500 a year.
Other Programs
If you or your spouse is a U.S. citizen who received taxable disability income and was permanently and totally disabled during this tax year, you may be eligible for the Credit for the Elderly or the Disabled.
A guide to other employment supports for people on SSI is available here.
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Trust Funds
A Special Needs Trust (SNT), sometimes called a Supplemental Needs Trust, is a legal arrangement in which a person or organization (like a bank) manages assets for a person with a disability. The person with the disability is called the “beneficiary” and the person who is managing the assets is the “trustee.” Many kinds of assets can be put into a trust, such as cash, stocks, bonds, and real estate.
An SNT provides for the needs of a person with a disability without losing or reducing their benefits such as Supplemental Security Income (SSI), Medi-Cal, In-Home Support Services (IHSS), and HUD housing assistance. Assets in an SNT won’t be counted toward the SSI, Medi-Cal and IHSS asset limits.
Note: The rules for setting up trusts can be complicated and it is important to make sure that you seek out good advice about how to set one up in order to avoid serious problems.
If you get public benefits such as SSI, Medi-Cal, IHSS, and HUD housing assistance, the SNT must say that:
- It is up to the trustee when and how to use the funds to benefit the beneficiary
- The main purpose of the trust is to supplement the support and services the beneficiary gets from public benefits, and
- The beneficiary cannot sell or give away her rights under the trust to anyone else and has no control of the assets.
These three statements will usually keep the assets in the SNT from being counted against your eligibility for public benefits. It is also important to know that the assets in the SNT must not have belonged to you before the trust was set up (except for a First Party SNT – see Three Types of Special Needs Trusts). This means that you cannot use the SNT as a savings account. You cannot put your own money into most SNTs. If someone you know wants to leave assets for you in their will, they must state the name of the SNT in their will, not your name.
While public benefits such as SSI, Medi-Cal, IHSS, and HUD housing assistance provide basic support for food, shelter and medical care, a Special Needs Trust can be used to add support and services in the ways most helpful to you. For example, money from the trust could be used to pay for your recreation, telephone bill, education, and vacations. The money in an SNT cannot be used for food or shelter; that is what your SSI money is for.
How does money from the SNT affect your SSI payments?
- Money paid directly to providers for items other than your food and shelter will not reduce your SSI payments.
- If money is paid directly to a provider for food or shelter, your SSI payment will be reduced, but only up to a certain limit.
- Money paid directly to you will reduce your SSI payment.
A good way for people to give you assets, such as money, but not affect your public benefits (SSI, Medi-Cal, IHSS, and HUD housing assistance), is to give the assets to the SNT. If someone simply gives you money directly, that gift might result in a loss or reduction in the amount of your SSI checks, Medi-Cal benefits, IHSS funding, and HUD housing assistance. This will happen if that money will cause you to have more than the asset limit you can have for these programs. Also, if you have a disability and you inherit money or get a settlement in a court case, those funds can also cause your SSI, Medi-Cal, IHSS and HUD housing assistance to be affected unless that money is placed directly into a First Party SNT (see Three Types of Special Needs Trusts).
Although SNTs can have huge advantages, they also have strict rules. The funds must be used to benefit only you; no one else can benefit from that SNT. Also, the trust is set up to help you, but no payments can be made directly to you. When you need to pay a provider for something that is not food or shelter, the trustee will pay the money from the SNT directly to the provider. Only the trustee can handle the money from the SNT.
Three Types of Special Needs Trusts
Third Party Special Needs Trusts
Parents usually set up and provide the money for Third Party Special Needs Trusts, often through their will, and sometimes by purchasing life insurance payable to the trust. Other family members can also put money in this type of SNT, such as grandparents, aunts, and uncles. The only person who cannot place money into this type of trust is you, the person with a disability.
Some parents place their property in a "living" trust and state in that trust that a separate SNT for their disabled child is set up. This type of SNT becomes effective immediately and is a good idea for families where aunts, uncles, and grandparents might want to leave money to the SNT. Anyone can give money to the SNT by either writing a check or writing a will naming the SNT as the beneficiary.
Note: You do not want your relatives giving money directly to you as this may lower or stop your SSI, Medi-Cal, IHSS, and HUD housing assistance.
The key to a Third Party SNT is that the money cannot be used for housing or food. Housing and food are considered "basic needs" under Social Security laws. If you are getting free housing or food from someone else, including a family member or an SNT, then there will be a penalty and your public benefits will be lowered or stopped. This is why you don’t want to use assets from the SNT for housing or food.
When creating the Third Party SNT, you must decide who will get any assets that are left in the SNT after you die. Unlike other SNTs, the Third Party SNT does not need to repay the government for any Medi-Cal expenses.
First Party Special Needs Trust
A First Party SNT is used if you have accumulated many assets, inherited assets, or received assets from a court settlement. (In these situations, you actually own the money, so the funds cannot be put into a Third Party Special Needs Trust.)
It used to be that people with disabilities were not allowed to set up their own First Party SNT, even though it was their own money. A parent, grandparent, guardian, or court had to set up the trust, the trustee controlled the funds, and you could not be your own trustee. The laws changed in 2016, and this type of trust can now be set up by you, or by your parent, grandparent, legal guardian, or the court.
To qualify, you must be under 65 years old and must have a disability as defined by Social Security. If you are not disabled enough to qualify for Social Security, you cannot have this type of SNT.
The SNT has to specify that after you have died, any assets left in the SNT must be used to pay back the government for what they paid in Medi-Cal for you after the SNT was set up.
Pooled Special Needs Trust
This type of trust pools assets from different people and puts them into a large investment fund. Although the funds are pooled (used together), you still have your own separate account. Pooled Trusts offer both First Party accounts (funded with only your own money) and Third Party accounts (funded only with money from other people). As with a First Party SNT, all beneficiaries of a Pooled SNT must have a disability that meets Social Security's standards.
A Pooled SNT is set up through a nonprofit organization. The nonprofit organization will administer the Pooled SNT, take care of all the tax preparation, make investment decisions, and act as the trustee.
Before the Pooled SNT is set up, you and/or your family members must explain what you want the trust to pay for, and who should be consulted about these matters. Anyone can put money into the Pooled Special Needs Trust for you - parents, grandparents, even you.
Who can set up a Pooled Special Needs Trust?
- You
- Your parent
- Your grandparent
- Your legal guardian
- The court
Any money left in the Pooled SNT after you die will be used to pay back the State Department of Health Care Services for the amount of money they spent on Medi-Cal for you after the trust was set up. If money is still left over, it can be given to whomever you tell the trustee you want it to be given.
Trusts are a complicated but important issue. If you have questions about trusts you can find additional resources or an attorney in your area at the Special Needs Alliance.
For information about Special Needs Trust and SSI eligibility click here.
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FAQs
What is an ABLE account?

ABLE accounts let people who have disabilities that began before they turned 26 keep money in a special tax-advantaged account. The first $100,000 in an ABLE account does not count against the $2,000 Supplemental Security Income (SSI) resource limit, and none of the money in an ABLE account counts for Medi-Cal or CalFresh (formerly Food Stamps).
However, ABLE accounts have restrictions:
-
They can only be opened through specific programs or institutions.
- California's ABLE account program is CalABLE. You can choose to open an account in another state’s ABLE program.
- You can only open one ABLE account.
-
You and the other people making contributions on your behalf have limits on how much you can deposit each year.
- Up to $17,000 from any source (including you, your family and friends, your benefits, and other unearned income)
- Another $13,590 from your own earned income (if you have a job).
-
You can only use money in an ABLE account for specific things, such as:
- Education
- Housing
- Transportation
- Help getting and keeping work
- Health care
- Assistive technology, and
- Other approved expenses.
What is an Individual Development Account (IDA)?

An Individual Development Account, also known as an “IDA," is a savings account for low-income workers that can be used for small-business development, higher education, or the purchase of a first home.
Each time you make a deposit, the IDA program contributes an additional deposit called a match. Most IDA programs have a match of one to four times the size of the deposit you make. So for an IDA with a 2:1 match, each time you deposit $25, you get an additional $50 toward your savings goal.
Who can get an Individual Development Account (IDA)? 

Each IDA program may have slightly different eligibility requirements. Generally speaking though, the following will apply:
- Your annual income must be within 200% of the Federal Poverty Level ($29,160 for an individual, $39,440 for a couple).
- You must have earned income. For an IDA that is funded by Temporary Assistance for Needy Families (TANF) or the Assets for Independence Act (AFIA), this means income from work. IDAs that get funding from other organizations and agencies may have slightly different earned income requirements and allow for income from other sources.
Many IDA programs also have asset and credit history limits. Once you’re enrolled in an IDA program, you must take free financial education training classes.
Note: There aren't as many IDA programs as there used to be. Some are still active, but it can take a bit of effort to find one that is accepting applications.
What can I use an Individual Development Account (IDA) for? 

IDAs that are funded by Temporary Assistance for Needy Families (TANF) or the Assets for Independence Act (AFIA) can be used for three purposes:
- Developing a business
- Investing in higher education, or
- Purchasing a first home.
IDA programs that are funded by other sources may let you save for other purposes, like buying a car or computer. Check with the specific IDA program you want to participate in for more information.
How do I participate in an Individual Development Account (IDA) program? 

First, you need to decide whether you want to open an IDA and what your goal is. Then, you will need to find a program in your area. You can use the IDA directory to find one near you. Next, you will need to attend an orientation meeting to find out about the program and verify your eligibility.
Once accepted into the program, you will open a savings account at a bank that is tied to the IDA organization. When you have reached your savings goal, you’ll be allowed to start withdrawing money from the account to spend on your goal.
Are there any medical eligibility requirements to enroll in an Individual Development Account (IDA)? 

No. Disability status is not required to participate in an IDA program. IDAs are offered to anyone who can meet the eligibility requirements.
How do I find an Individual Development Account (IDA) program?

To research and find an IDA program in California, check out the DB101 list of IDA resources and the Prosperity Now IDA directory.
Note: There aren't as many IDA programs as there used to be. Some are still active, but it can take a bit of effort to find one that is accepting applications.
Can I participate in a Plan to Achieve Self-Support (PASS) and an Individual Development Account (IDA) at the same time?

If I’m getting Supplemental Security Income (SSI), do I need to tell Social Security about my Individual Development Account (IDA)?


Yes. You should ask your IDA caseworker to write a letter stating that you can participate in the IDA program without losing your SSI benefits. The letter should specifically mention the “Exclusions under Other Federal Statutes” clause. You should take the letter to Social Security for documentation and keep a copy of it for yourself.
Can I qualify for an Individual Development Account (IDA) while I am eligible for Social Security Disability Insurance (SSDI)?

Yes. There are no asset restrictions for people on SSDI who want to participate in IDA programs. However, your earned income is still subject to the SSDI work rules.
Is there a savings cap for Individual Development Accounts (IDA)?

Yes. Most IDA programs only let you save a certain amount of money in your account—often $4,000 to $6,000. This includes the money you deposit as well as the matching funds. Once you reach the limit, you won’t be allowed to deposit any more money.
What is a Plan to Achieve Self-Support (PASS)?

A PASS lets people on SSI to set aside money and resources for a specified work goal. The purpose of a PASS is to help you get items, services, or skills needed to reach your work goal.
The work goal that you choose should help you earn enough to lower or get rid of your need for SSDI and SSI benefits.
How can I get help when applying for a Plan to Achieve Self-Support (PASS)?

Social Security's PASS Cadres are PASS experts. Their job is to help people come up with a plan and apply successfully for a PASS. To find a PASS Cadre, click here.
Why should I start a Plan to Achieve Self-Support (PASS)?

Under Supplemental Security Income (SSI) rules, any income that you get will lower your SSI benefits. But, if you have an approved PASS, you can use that income to pay for the items needed to reach your work goal.
Social Security will not count the money that is set aside under a PASS plan when deciding your monthly SSI benefits. This means you will get a higher SSI payment. Getting a PASS can also let you get SSI benefits if your income or resources are currently above the limits.
Who is eligible for a Plan to Achieve Self-Support (PASS)?

To be eligible to use a PASS you must:
- Want to work
- Be eligible to get Supplemental Security Income (SSI) because of disability or blindness, and
- Have other income and/or resources to complete a work goal
SSI recipients who get benefits because they are above age 65 can only qualify for a PASS if they were getting SSI because of disability or blindness in the month before their 65th birthday.
What can I use a Plan to Achieve Self-Support (PASS) for?

What will I have to do to participate in a Plan to Achieve Self-Support (PASS)?


To participate in a PASS you will need to have:
- A written plan
- A work goal
- A reasonable time frame for meeting your work goal, and
- An explanation of the expenses necessary to achieve the work goal.
If your PASS plan is for self-employment, you must supply a detailed business plan that gives a description of how you intend to make this business succeed.
Are there any medical eligibility requirements to enroll in a Plan to Achieve Self-Support (PASS)?

Yes. To be able to use a PASS you must continue to meet Social Security’s requirements for disability or blindness. Social Security will also consider any medical conditions when they decide if you have a reasonable work goal. For example, they may ask you to revise your PASS if you have trouble standing for long periods of time and want to work as a traffic officer.
Does what I have in the bank and what I own affect my eligibility for a Plan to Achieve Self-Support (PASS)?

Yes. To be eligible for a PASS, you must meet the resource requirements for Supplemental Security Income (SSI). You are allowed to have $2,000 in resources ($3,000 for a couple), one house that you live in, and one car.
If you have resources above the eligibility limits, you can set aside the extra resources as part of your PASS.
How do I prepare to apply for a Plan to Achieve Self-Support (PASS)?

Creating a PASS requires that you have a work goal and an explanation of how you will be able to accomplish this goal. If you currently do not have a clear work goal or a clear way to achieve it, you may consider working with organizations like your state Department of Vocational Rehabilitation.
It can be very helpful to work with a local PASS expert when starting this process.
If your PASS plan is for self-employment, you must supply a detailed business plan that gives a description of how you intend to make this business succeed.
How does a Plan to Achieve Self-Support (PASS) work with an Individual Development Account (IDA)?

If you are participating in a federally funded IDA program, you can save money and get a match without jeopardizing SSI or Medi-Cal benefits. If you have an IDA that gets federal funding from block grants under Temporary Assistance for Needy Families (TANF) or the Assets for Independence Act (AFIA), savings cannot be counted as assets.
IDA programs that are not federally funded can count as assets and affect your SSI eligibility, unless the IDA is approved as part of a PASS plan.
What is the Earned Income Tax Credit (EITC)?

The Earned Income Tax Credit is a federal tax program that lowers the amount of income tax owed by low-to-moderate income workers. The credit ranges from $2 to $7,430 depending on your income and the number of qualifying children in your family.
How often can I claim an Earned Income Tax Credit (EITC)? 

You can claim an EITC every year that you qualify.
What are the eligibility requirements for an Earned Income Tax Credit (EITC)?

To be eligible for the Earned Income Tax Credit (EITC) you must:
- Have earned income from employment, self-employment, or employer-paid disability benefits you got before retirement
- Meet adjusted gross income requirements
- Have a Social Security Number valid for employment
- File a joint tax return if married
- Be a U.S. citizen or resident alien. If not, you must be married to a U.S. citizen or resident alien and filing a joint tax return
- Live in the U.S. for more than half of the year
- Be 25 to 64 years old, if you aren’t claiming any qualifying children (if you are claiming qualifying children, you can be any age)
In addition, you cannot:
- Claim foreign income using Form 2555
- Have investment income that exceeds $11,000 for Tax Year 2023
- Be the dependent of another person
- Be the qualifying child of another person
How do I claim an Earned Income Tax Credit (EITC)?

If you are eligible, you can claim an EITC while filing your annual federal tax return, IRS Form 1040. If you have a qualifying child, you will need to attach a Schedule EIC.
Does what I have in the bank and or what I own affect my eligibility for an Earned Income Tax Credit (EITC)? 

How do I know how much my Earned Income Tax Credit (EITC) is worth?

The value of your EITC is based on your adjusted gross income (AGI) and the number of qualifying children in your family. You can calculate your EITC yourself by using the Earned Income Credit Worksheet in Form 1040. Or you can ask the IRS to calculate it for you by noting an “EIC” in the Earned Income Credit line on your tax return.
When can I get benefits from the Earned Income Tax Credit (EITC)?

You can claim your Earned Income Tax Credit while filing your annual federal tax return.
Is there someone who can help me with my taxes?

What is a Special Needs Trust (SNT)?

A Special Needs Trust (SNT) is a legal document with instructions about the management and distribution of the assets placed in the SNT. The person who benefits from the SNT is the “beneficiary.” The person or organization (such as a bank) that manages the SNT and distributes the funds for the beneficiary is the “trustee.” Special Needs Trusts are set up to protect public benefits. The assets are used for support and services, other than food and housing, for a person with a disability.
Why are Special Needs Trusts (SNTs) important?

Special Needs Trusts (SNTs) are important because they protect your eligibility for public benefits. The SNT lets you have money available for things other than food and housing without the money counting towards your asset limits for Supplemental Security Income (SSI), Medi-Cal, and In-Home Supportive Services (IHSS).
SNTs also improve the quality of care that you can get; a well designed SNT can give you additional care options and opportunities for treatment and rehabilitation, housing, electronic equipment, computers, job training, vacations, etc.
Learn more
PASS Estimator
Get SSI and want to save up money for a work-related goal? See how a PASS can help.
Getting Past the Myths: The Truth About Working
Get the facts about how benefits support work.
Programs That Support Work
Learn about programs that can help you prepare for and find work.
Building Your Assets and Wealth
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Pitfalls
Participating in an Individual Development Account (IDA) that risks your benefits
The type of funding an IDA program has will determine how it affects your benefits. Federally funded IDAs—those with block grants from Temporary Assistance for Needy Families (TANF) or the Assets for Independence Act (AFIA)—will not jeopardize your eligibility for benefits.
If you enroll in a nonfederally funded IDA program, you could lose your Supplemental Security Income (SSI) or Medi-Cal benefits. If you enroll in a nonfederally funded IDA program and have an approved Plan to Achieve Self-Support (PASS), however, you will not risk losing your benefits.
Before you enroll in an IDA program, be sure to find out what its funding source is and how that may affect your existing benefits.
Failing to fulfill Individual Development Account (IDA) requirements
If you do not fulfill the requirements of the IDA program you might no longer be able to access the matching funds provided by the program. Be sure to review the requirements of your program carefully with your IDA caseworker.
Working without considering a Plan to Achieve Self-Support (PASS)
Many people who are eligible for Supplemental Security Income (SSI) and considering work are not aware that a PASS is an option that may make transition back into the workplace easier. Using a PASS may let a person have access to more income and resources when transitioning into the workplace.
Failing to account carefully for PASS funds
To use PASS funds you must provide receipts to verify your expenses. Funds intended for a PASS must be deposited into a separate account. PASS money cannot be entered into an account that is used for personal expenses. Failure to use the funds as approved, or keep them separate from personal living expenses, could result in:
- A Supplemental Security Income (SSI) overpayment
- Suspension of the PASS, and
- Putting future PASS participation at risk
Paying for tax filing assistance
If you are on a limited income, do not pay someone to do your taxes. Use a Volunteer Income Tax Assistance (VITA) Center to file. Most centers can e-file your return for free.
To find the nearest VITA site, visit this website or call 1-800-906-9887.
Giving assets directly to a person who is eligible for government benefits
If you get public benefits, such as Supplemental Security Income (SSI), Medi-Cal, In-Home Supportive Services (IHSS), and HUD housing assistance and someone gives money directly to you, you may lose your benefits or your benefits may be reduced because you might now have more assets than each program's asset limit for these programs. Instead, the money should be put into a Special Needs Trust (SNT). The use of an appropriate SNT can help you have money available for services and supports other than food and housing, without the funds counting against your eligibility for public benefits.
Big changes for disability-based Medi-Cal categories with asset limits:
- On July 1, 2022, Medi-Cal asset limits increased to $130,000 for individuals, $195,000 for couples
- On January 1, 2024, these asset limits will be removed completely.
This applies to Medi-Cal through A&D FPL, the Working Disabled Program, and ABD–MN, as well as Medicare Savings Programs (MSPs). If you've been denied Medi-Cal or an MSP because you had too much in assets, try applying again.
Note: This doesn't change SSI-linked Medi-Cal or Medi-Cal through SSI 1619(b), as they still have SSI's $2,000 asset limit. And it doesn't change income-based Medi-Cal, which doesn't have an asset limit.
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PASS Estimator
Get SSI and want to save up money for a work-related goal? See how a PASS can help.
Getting Past the Myths: The Truth About Working
Get the facts about how benefits support work.
Programs That Support Work
Learn about programs that can help you prepare for and find work.
Building Your Assets and Wealth
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Resources
Find Local Services
To find services in your neighborhood contact your local:
- IDA program
- Benefits Planner
- PASS specialist
- Trust Attorney
- Volunteer Income Tax Assistance (VITA) Center, or call 1-800-906-9887.
Enrolling in Asset Development Programs
ABLE Accounts: California's ABLE account program is CalABLE. Learn more about ABLE accounts and compare different state ABLE programs at the ABLE National Resource Center.
Find an IDA program in California: Check out the DB101 list of IDA resources and the Prosperity Now IDA directory.
To apply for PASS: You will need to fill out a PASS application.
The PASS application is extensive. Social Security's PASS Cadres are PASS experts. We recommend that you follow up with a PASS Cadre for assistance. Their job is to help individuals formulate a plan and apply successfully for a PASS. Find a PASS specialist.
To enroll in the Family Self-Sufficiency Program (FSS): Enrollment is handled through the Public Housing Authority, so the first step towards enrolling in this program is to talk with your local Public Housing Authority. For more information on this program, go to the U.S. Department of Housing and Urban Development website.
To take advantage of the Earned Income Tax Credit (EITC): Publication 596 is a comprehensive guide to the EITC, providing information on program rules, eligibility, qualifying children and other related topics. You can use the IRS EITC Assistant to help determine whether or not you qualify for an EITC.
To take advantage of the Childcare Tax Credit (CTC): For information about qualifying for the CTC, and links to forms related to the CTC, visit the IRS website.
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Tax Help: If you are on a limited income, do not pay someone to do your taxes. Use a Volunteer Income Tax Assistance (VITA) Center to file. Specially trained volunteers will help you take advantage of the tax credits available to people with disabilities. Most centers can e-file your return for free. To find the nearest VITA site, visit this website, or call 1-800-906-9887.
Student Earned Income Exclusion (SEIE): For general information on the SEIE, start at Social Security’s website.
Protection and Advocacy
For other legal advocacy services for people with disabilities contact Disability Rights California. You can call toll free at 1-800-776-5746 or 1-800-719-5798 (TTY). Click here to visit them online.
Learn more
PASS Estimator
Get SSI and want to save up money for a work-related goal? See how a PASS can help.
Getting Past the Myths: The Truth About Working
Get the facts about how benefits support work.
Programs That Support Work
Learn about programs that can help you prepare for and find work.