If you earned $49,078 or less last year, it is highly likely that you will be eligible for the Earned Income Tax Credit (EITC). Although the EITC has existed for decades, it’s been improved and expanded over the years. Yet, 20% or approximately 5 million eligible workers and their families don’t claim the credit when they file or don’t file altogether. Find out if you qualify for this credit.
How do I know if I qualify for the EITC?
The benefit is based not only on your income, but also whether you are filing as an individual or head of household, or as a married couple filing jointly. It also is based on whether you have children, and if so, how many you have. It just so happens that a third or roughly 9 million of the 27 million of eligible workers have changes to their marital or parental statuses. This is one of the reasons why so many people or as much as 5 million never claim the credit.
How much money can I have earned?
The income limits vary based on the number of children you have. For an individual or head of household with no children, 2011 income must be less than $13,660; for married people filing jointly who have no children, income must be less than $18,740 to qualify for the tax credit. Income limits increase based on the number of children you have, topping out at $43,998 for individuals or heads of household who have three or more children, and $49,078 for married people filing jointly who have at least three children.
My income is under those limits. Now what?
The IRS offers the online 2011 EITC Assistant, which walks you through the steps to see if you qualify. It looks at things like the age of your children, whether they lived with you during the year, and whether you have investment income. The site also can help estimate your credit amount.
How much money can I get back?
The maximum credit for someone with three or more children filing jointly is $5,751, but even single people with no children can receive up to $464. The EITC can help reduce the amount of tax you owe, or even result in a tax refund.
Unlike prior years, you cannot get the credit in advance
Previously, a taxpayer that expected to be eligible for the EITC was able to apply for and receive advance payment of a portion of the credit. The reasoning was that this credit is refundable which means that if you don’t owe any tax, you’ll get the credit back or a portion of it in the form of a check. For the 2011 tax year, this is no longer an option.
More Questions? Browse Answers or ask your tax credit questions online.
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