The Top 4 Things You Need to Know
Author: Keith Huggett
The Earned Income Credit was implemented in 1975. If you earned $50,270 or less in 2012, you may qualify for the EITC. According to the IRS, one in five eligible taxpayers fail to claim their EITC every year.
Here are the top four things you should know about the Earned Income Credit:
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The EITC is valuable. It not only reduces the federal tax you owe, but could result in an refund. Depending upon how much you make and the number of qualifying children in your household, if you qualify, the credit could be worth up to $5,891.
- The maximum amount of income you can earn and still get the credit has increased. You may be able to take the credit if:
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You have three or more qualifying children and you earned less than $45,060 ($50,270 if married filing jointly),
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You have two qualifying children and you earned less than $41,952 ($47,162 if married filing jointly),
- You have one qualifying child and you earned less than $36,920 ($42,130 if married filing jointly), or
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You do not have a qualifying child and you earned less than $13,980 ($19,190 if married filing jointly).
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Your adjusted gross income also must be less than the amount in the above list that applies to you
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Check your eligibility. If your financial, marital, or parental situations change from year to year, you need to review the EITC eligibility rules.
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Filing your return. In order to claim the EITC, you have to file your tax return. You must also include Schedule EIC when you file your form 1040. Your professional tax preparer will assist you with this process.
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Know the qualifications. You should understand the qualifications of the EITC before trying to claim it, including:
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You cannot claim if your filing status is Married Filing Separately.
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You must have a valid Social Security Number for yourself and your spouse if filing as a married couple.
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You must have earned income.
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Married couples and single people without children may qualify. If you do not have children you must also meet age and residency requirements as well as dependency rules.
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Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay as earned income for the purpose of computing the EITC. The combat pay remains nontaxable.
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Your investment income must be $3,200 or less.
There are other qualifications that will affect the amount of the credit. If you have more than one qualifying child, it will modify the amount of your adjusted gross income limit. Having an experienced tax preparer to answer your tax questions is very important. He can make certain that no mistakes occur when filing your return and claiming your tax credits.
Should you have any questions regarding the Earned Income Tax Credit, the Tax Specialists at The Tax Office Inc., have the answers. We are ready to provide you the quality tax service you deserve. Contact us now.
