Tough economic times mean that working families need to make the best use of every dollar. That’s why the earned income tax credit (EITC) is good news for low- to mid-income households. By taking advantage of the tax credit, individuals whose earnings fall under a specified threshold will receive up to $6,516 based on qualifying factors. Records from previous years indicate that as many as 25% of eligible taxpayers have not filed for the credit, meaning that all that money has been sitting in Washington instead of helping families in need as intended.
What is the Purpose of the EITC?
The earned income tax credit seeks to provide financial relief to working families who receive low wages. It accomplishes this goal by putting dollars back in the pockets of low-income families based on their financial circumstances and the number of dependents they support. If you qualify for the credit, it’s important that you apply to receive your qualifying amount when you file your taxes so you won’t miss out on receiving the funds set aside for you.
Who Qualifies for the EITC?
Because the EITC is designed to help low-income working families, only individuals and married couples who worked and who earned less than a specified amount will be eligible to receive the credit. Your income level and filing status will determine how much you are eligible to receive. The earned income tax credit can be received by both married and single individuals, by those with and without children, and by those filing separately or jointly. For example, a married couple filing jointly who have three children can receive the full $6,516 if they made less than $48,362 the previous year. A single person who made less than $13,460 would be eligible to receive $526. Qualifying children include blood relatives, adopted children, or legal foster children. Residency and age requirements also apply.
How Do You Claim Your Credit?
You can claim the earned income tax credit when you file your regular tax return. If you received advance EITC payments, you must report this when you file. The W-2 form you receive from your employer should show you how much of your EITC you received in advance.
The earned income tax credit provides much needed relief to families who find themselves financially strapped in a tough economy. By taking the necessary steps to claim your credit, you can benefit from the financial boost provided when extra dollars are put back into your pocket.
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