Do You Qualify for the Earned Income Tax Credit? 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: Any wages, salaries, tips, and other taxable pay from an employer, Any union strike benefit payments, Long-term disability benefits paid to you before you reached minimum retirement age (between 55 and 57, depending on when you were born), and 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: Is related to you in any way, except for someone who is a cousin, Lives with you for more than half the year, Did not file a joint return except for the sole purpose of getting a refund, and 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 Dont 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 elses 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 years 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 youd 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. TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.
Posted on: Mon, 05 Jan 2015 22:04:39 +0000