Pilot to Practice: California’s New Foster Youth Tax Credit

In recent years, tax filing has received increased attention as a strategy to reduce poverty by directing financial resources to low-income Californians, including foster youth. California expanded its earned income tax credit in 2017 to include youth ages 18 through 24 (transition-age youth) without custodial children, and in 2020 to include undocumented tax filers. While this new program is promising, there are numerous barriers that prevent tax credits from achieving their full potential to reduce poverty, particularly for foster youth. Neither state nor federal law requires they receive help, and the income of foster youth commonly falls below the filing threshold of the Internal Revenue Service (IRS). Often without a parent or extended family member to help them file their taxes, many current and former foster youth lack the support and guidance needed to file with confidence. Together, these factors have led many foster youth to lose out on money they are owed. This publication includes the findings of a six-county pilot project led by John Burton Advocates for Youth (JBAY) to ensure current and former foster youth receive state and federal tax credits and stimulus payments accessible by filing taxes. The purpose of the publication is to document the impact of tax filing on foster youth and to offer guidance to inform the implementation of the newly established state Foster Youth Tax Credit.