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Taxes and potential tax credits may not be at the forefront of everyone's minds. Many people do not know if they qualify for the Earned Income Credit on their taxes, and many are surprised when find that they do qualify for the Earned Income Credit. The U.S. Government reported that 25% of households eligible for the Earned Income Credit (EIC) didn't take it on their tax filings last year. The credit, worth up to $4,716, could have given families even bigger
refunds than expected on their taxes. What is the EIC, exactly, and why isn't everyone who qualifies taking advantage? The Basics. Earned Income Credit (EIC) is a refundable tax credit available to some lower-income households that earned income during a given tax year. Even if you didn't earn enough to owe taxes, it is possible to qualify for this Earned Income Credit as a refund on your tax return. You do need to have some earned credit (wages or earnings) to qualify for the EIC. Who Qualifies? The maximum income requirements to qualify for the Earned Income Credit increase with each eligible child. If you have more than two children, you can make no more than $31,152 of earned income to qualify for the EIC. Families with one child can make no more than $27,413 to qualify for the EIC. If you have no children, you can make up to $10,380 of earned income. To qualify for the Earned Income Credit, you must be between the ages of 25 and 65, and cannot be claimed as someone else's dependent. Additionally, you must file for the EIC jointly if married. You also must not be a nonresident alien to qualify for the EIC. What is earned income? Basically, it is all the money you received in a given tax year, not including the following: - Alimony or child support
- Welfare benefits
- Social Security benefits
- Veteran's benefits
- Interest and dividends
- Unemployment insurance
- Pension or annuities
Additional guidelines for the EIC include determinations for eligible children and residency. There will be a special form for claiming the Earned Income Credit (Schedule EIC), and it must accompany your tax return. Like any questions about your taxes, questions about the EIC are best answered by a professional who is familiar with EIC qualifications and can answer any and all EIC questions. If you can claim EIC this year, it is a great way to get more money back on your tax return. |
