Earned Income Tax Credit Can Put Money in Your Pocket
You could be eligible to get more money back from the IRS – as much as $5,666.
If you earned less than $48,362 from wages, self-employment or farming last year, you may qualify for a refundable tax credit called the Earned Income Tax Credit, or EITC. But you must file a federal income tax return claiming the credit to get it.
EITC can be a big financial boost for working people hit by hard economic times. Many individuals who saw their incomes drop in 2010 may qualify for the first time.
The credit has been making the lives of workers a little easier for more than 35 years. Yet it remains little known, possibly because people move into and out of eligibility as their financial, marital and parental statuses change. IRS estimates four of five eligible people claim and get their EITC.
Unlike other tax credits, both EITC eligibility and the amount of the credit is based on several factors such as the source and amount of your income, or combined incomes if married, whether you have qualifying children and how many. Workers without children also may qualify.
The amount of the credit peaks then phases out at certain income limitations depending on filing status and other factors. You may qualify for EITC even if you had no federal tax withheld or are not otherwise required to file.
The credit is complex, but worth exploring. It’s even more valuable if your state has a corresponding tax credit. (New Jersey does have their own.)
The online EITC Assistant at www.irs.gov/eitc can help determine your eligibility and estimate the amount of your credit. Free help preparing your return and claiming EITC is available at volunteer income tax assistance sites and IRS Taxpayer Assistance Centers. To locate a volunteer site, call your community’s 211 or 311 number for local services or call the IRS at 1-800-906-9887. Find an IRS Taxpayer Assistance Center in the blue pages of your telephone directory.
Remember: if you are eligible, you must file a federal income tax return, even if you are not otherwise required to file, and you must specifically claim the credit to get it. Find more information about EITC at www.irs.gov or in your tax software package.
According to the IRS, rural and non-traditional families — such as grandparents raising grandchildren — childless workers, and non-English speaking taxpayers are among those who most frequently overlook the credit.