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Do You Qualify for the Earned Income Tax Credit?

12/12/2014

 
There are many requirements you must meet in order to qualify, but it may lower your tax bill.
Supporting a family can be difficult, not to mention expensive.  Working families whose income is fairly low need all the help they can get with their income taxes. 

The Earned Income Tax Credit (EITC) was put in place by Congress to provide relief for low-income families who may have trouble paying their tax bills.

Qualifying for the Credit

You may be eligible for the EITC if you have earned income, are not filing as married filing separate, and are claiming adjusted gross income within certain limits. Earned income would consist of:
  1. Any wages, salaries, tips, and other taxable pay from an employer,
  2. Any union strike benefit payments,
  3. Long-term disability benefits paid to you before you reached minimum retirement age (between 55 and 57, depending on when you were born), and
  4. Net earnings from self-employment if you own a business, run a farm, are a minister or member of a religious order (these will have some special rules), or have income as a statutory employee.
 
In addition to earned income, any investment income you received must be $3,350 or less for the year to qualify for the EITC.

Taking the Credit If You Have Children

The EITC was put in place to help those with children, so the amount of the credit will depend on the number of children you have.  You can receive a credit if you do not have a qualifying child, but the credit is greater if you do.  A qualifying child would be one who:
  1. Is related to you in any way, except for someone who is a cousin,
  2.  Lives with you for more than half the year,
  3. Did not file a joint return except for the sole purpose of getting a refund, and
  4. Is younger than you, and is either younger than 19, or younger than 24 and a full-time student.  Permanently and totally-disabled individuals do not have to meet the age standard.

Taking the Credit If You Don’t Have Children

If you do not have a qualifying child, you can still get the credit. However, in addition to the rules mentioned previously, you will have had to have lived in the U.S. for over half the year, be between 25 and 65 years of age, and cannot be claimed as a dependent on someone else’s return.

The Form
​

In order to claim the credit, you will need to file Schedule EIC.  There are a few pieces of information we will need to complete this schedule, such as Social Security cards, birth dates, the previous year’s federal and state returns, and documentation of income (W-2s and 1099s, income and expense records, etc.).
That may sound like a lot of paperwork, but you’d need most of it to file your taxes anyway. If you think you may be eligible for the EITC, contact us to discuss your situation, and we will be glad to help you.

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  • Home
  • About
    • Book An Appointment
  • Accounting
    • Dashboard
    • Xero+Accountency
    • Xero Intro
    • AutoMagical Accounting
    • QuickBooks >
      • QuickBooks Updates
    • Store
  • Payroll
  • Taxes
    • Dashboard
    • Individuals
    • Businesses
    • Tax Stuff >
      • Individuals >
        • Income >
          • Debt Forgiveness
          • Foreign Income
          • Gambling Income
          • Unemployment
          • Other Income
        • Deductions & Credits >
          • Adoption
          • Charitable Contributions
          • Earned Income Tax Credit
          • Educational Expenses
          • Energy Tax Credits
          • Employee Business Expenses
          • Other Deductions and Credits
        • Affordable Care Act - Individuals
        • Children and Dependents
        • Death
        • Disabled Taxpayers
        • Educators
        • Health Care
        • Identify Theft
        • Marriage and Divorce
        • Military
        • Real Estate
        • Retirement Savings
        • Seniors
        • State Taxes
        • Record Keeping
        • Who Must File
        • Other Topics
      • Businesses >
        • Affordable Care Act - Businesses
        • Year-end Reporting Obligations >
          • 1099's
          • Health Insurance Premiums
          • Depreciation
          • Reimbursed Employee Business Expenses
          • Company Automobiles
        • Employment Tax Credits
        • Independent Contractors
        • Tax Credits and Deductions for Businesses
        • Other Business Topics
        • Required Business Posters
      • Amended Returns
      • IRS Notices and Problems
      • Tax Plan >
        • All About the Earned Income Tax Credit
        • 5 IRS Audit Red Flags
        • Retirement Plans for Sole Proprietors
        • Are You Claiming All of Your Tax-Deductable Business Expenses for 2015?
        • All About Past Due Tax Returns
        • Do You Need to File Form 1099s?
        • How to File an Appeal with the IRS
        • Why You Might Get a Letter from the IRS, and What to Do
        • How to File an Amended Tax Return
        • Should You Claim the Home Office Deduction?
        • How to Avoid -- And Deal with -- Identify Theft
        • Q & A: IRS Audits
        • Are You Using the Right Business Structure?
        • Starting Planning for 2015 Income Taxes Now: 5 Tips
        • What You Need to Know About Estimated Taxes
        • Contractor or Employee? How the Income Tax Obligations Differ
        • The New Form 1095-A: Reporting Health Insurance Coverage
        • Are Your Social Security Payments Taxable?
        • Do You Qualify for the Earned Income Tax Credit?
        • Are You Eligible for Health Insurance Tax Credits
        • Employee Retirement Plans - Tax Advantages and Other Benefits
        • 5 Business Tax Credits You May Be Missing
        • New Business in 2012
        • Is it a Bad Debt or a Simple Revenue Loss? Telling the Difference
        • Business Taxes Add Complexity: How Will This Affect You?
      • Tax Scams