Don't Miss out on the Earned Income Credit
Every year when people do their taxes, they find out whether or not they are eligible for certain credits. One credit that many people benefit from is the EITC, or earned income credit, yet there are still millions of taxpayers who are missing out on this credit even though they are eligible.
The EITC provides significant income assistance to millions of poor and working class families. Families with children can receive a large credit depending on how much they earn. The credit is designed to supplement the earnings of lower income workers and families. It has served to lift millions of people out of poverty and is a very successful program. Unfortunately, sometimes people do not realize that they are eligible. If you have questions about this credit, you should talk to an experienced tax professional who can help you figure out if you qualify for the credit and how much you can receive.
Your Potential Earned Income Credit
In 1975, Congress approved tax credit legislation aimed at low to medium income taxpayers, designed to offset some of the growing social security taxes. Congress also hoped that the tax credit would provide an incentive for people in the lower tax brackets to work (and thus pay more taxes). This legislation created the Earned Income Tax Credit (EITC or EIC), which allows qualifying taxpayers to receive an earned income credit on their taxes up to a certain amount, and may even result in a refund of some of those taxes.
Earned income is classified as money earned by personal effort, which differentiates it from capital gains or social entitlement income. People who qualify for EIC must not have more than $3,100 of annual investment income. The EIC program is one of the biggest poverty reduction programs in the United States, and is most effective at helping low income families with children.
Number of Children and Earned Income Credit Amount Income Limits
- 0 children up to $457
- 1 child up to $3,050
- 2 children up to $5,036
- 3 or more children up to $5,666
Determining Your Earned Income Credit Eligibility
If you are starting to do your taxes and are wondering the best way to figure out what types of credits you qualify for, then you should consider using an online service. When you complete your taxes online, you will be told when something appears to be a credit that you can claim. One good example of this is the earned income credit which is a tax credit given to certain individuals who make under a specified income.
If you are uncertain about the EIC or earned income credit and whether or not you are eligible, filing online is an easy way to go about finding out about your current eligibility.
A Helpful Tool for Calculating Your Earned Income Credit Amount
There are quite a few resources out there in the world and on the internet to help file taxes, some of them free, some not, and all varying in quality. A particular tool that many may find helpful is the Turbo Tax income tax calculator which assists users in estimating their tax return.
One feature and advantage of using TurboTax is that it is very good at catching all the tax credits and deductions that someone may not realize they have if they filed on their own. Especially for those that have children, own their own personal business or donate to charity, they may not have to pay as much in as they originally thought.
Credits : www.irs.gov | www.michigan.gov | www.wikipedia.org | www.section179.org | www.about.com | www.ehow.com | www.turbotax.intuit.com | http://www.taxfoundation.org