The earned income credit, or EIC, is a tax credit aimed at helping the poor and low income families to increase their standard of living. The credit can return a tax refund of as little as $400 or as much as $4,500. Read on further to find out if you can qualify for the earned income credit on your tax return.
Some think that this credit is synonymous with having children, but those who have no dependents can also qualify and receive an earned income credit from the IRS. Single workers with no dependents can earn a much smaller sum of the tax credit. In error, they don't claim it or even ask about it on their taxes.
Although it is open to many people, some individuals will not meet the requirements to earn the EIC. People who obtain the EIC must be United States citizens, have a social security number, earn a taxable income, be over twenty-five years old, not file for taxes under the Married Filing Separately category, and have a child that qualifies. Meeting these requirements is the first step in receiving the earned income credit.
The income that you earn doesn't have to be a lot, but you do have to be gainfully employed. The program provides an incentive to work and make money, even if it's not a lot. The income can even come from self-employment or freelance work.
This tax credit is easier to obtain if you have a child, but that does not mean that you will automatically get it. In order to receive the EIC on the basis of your child, the child must be under eighteen years of age, under age twenty-four and currently taking post-secondary classes, or over eighteen years of age with disabilities that are cared for by a parent.
Children will allow you to qualify for the EIC if they live with you for at least six months of the year. If the child's parents are separated, the only parent who can claim the child towards the earned income credit is the parent who currently lives with the child. The EIC can be qualified for by means of foster children as well. Any and all children who are used to obtain the EIC must have a valid social security number.
All 1040 tax forms can be used to claim the earned income credit. Married couples have to file their tax returns jointly if they want to benefit from the tax credit. Couples that are separated and do not file together must choose who will claim the children towards the tax credit.
You may qualify for the earned income tax credit without even being aware of it. You might very well be missing out on money that you are entitled too because of misconceptions regarding the EIC.
Earned income credit is a very important tax paying benefit that is extended towards the low-income groups of the country. Earned Income Credit or EIC is essentially an anti-poverty attempt at lowering the tax burden on those who need it the most. The main targets of this anti-poverty measure are families with low income. The benefits of EIC are also available to individual earners who cannot show an eligible list of dependants who can count as the taxpayer's family.
The EIC provides for lowered tax returns for those who successfully qualify for the program. There are also chances of the tax being done away with altogether in case the person is eligible for complete tax waiver or has credit that that is larger than the tax owed. In this case the Internal Revenue Service called IRS will be giving back some money to the person. This amount varies but in this case the government is paying that person an amount of money as an added bonus to what the person is currently earning. This measure was mainly taken by the government to encourage people to work more so that poverty is considerably reduced.
The eligibility of a person depends on the adjusted gross income that is counted on an annual basis. If the person is an individual and does not have a family then the total amount is lowered to around $12,880. If the person is earning below this amount then the person is eligible for EIC. If the person has a family and children then the ceiling is higher. However, workers with one child have a lower ceiling than workers with two or more children. Workers with one child must have earned lower than about $33,995 to qualify for EIC. If the person has two or more children then the ceiling becomes $38,646.
Once you are sure that you are eligible for the EIC, you can apply for it by filing a tax return. However, filing tax returns by hand is really cumbersome and very confusing too. Also, you may not be aware of all the policies that apply to you. There is a far easier way of filing your tax return and that is called e-file.
E-file is a service from the IRS and taxpayers can also avail the service from IRS registered e-file service providers. E-file is essentially software enable; online, electronic tax filing that is more convenient than the usual procedure. The benefits of e-file are many. For starters, there is a lot less paperwork to do and hence there are fewer areas where you may have made a mistake.
It is also faster and more inclusive, in the sense that in case you are not sure of some policies or you do not know about them at all, e-file can help you clear up the confusion. For taxpayers with an AGI (adjusted gross income) of less than $56,000, e-filing is absolutely free. So join an e-file service today and reap your EIC benefits.
Both Michael Geoffrey & Gen Wright are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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