The Earned Income Tax Credit - a Godsend for the Poor
Most tax breaks are such a hassle applying for and getting passed, that often, they seem like they're more trouble than they're worth. But there is one exception at least to how these work - the earned income tax credit; for families that make some money but not much, this tax break returns a good portion of the taxes they pay, right back to them. Sometimes, in certain cases, even people who have no tax liability at all, can still get a tax refund to under this tax break. Most kindly credits don't actually put cash in your pocket that goes over what you actually paid the IRS. But a refundable credit like the earned income tax credit, will actually fix a certain sum that you are due. If it happens to be a sum that's larger than what you paid the IRS in the first place, you can actually get to make a profit out of it. But as with most things to do with the government, filing for this can be quite tedious.
Ordinary poor people usually can't take advantage of the earned income tax credit because the filing is so complex, they would need professional help for it, and where do they have the money for it? But there is hope yet, in the form of the IRS online help wizard, called the Earned Income Tax Credit Assistant. It basically breaks the process down to a few simple steps, and if you can satisfactorily answer the questions it asks you, it will help you see if you qualify, and how much you can stand to gain.
One myth doing the rounds out there is that you can only claim it if you have children. That's not really true. If you have children you will get back a larger sum; but you can still get something, children or no children. This year, you can actually get something like $6000 if you have three kids. If you have no children, you should be able to claim about $500. If you're not married, and you are by yourself, you will have to have made less than about $13,500 in the past year to qualify. However a family with three or more children, can still qualify with about $50,000 made over the past year. And be sure to account everything against it, investment earnings, earnings from your own business, and so on.
Children do happen to figure rather prominently in the reckonings of the earned income tax credit. It matters how old each child is, what exactly the relationship is that you have to the child (adopted parent, foster parent, or other), whether the child actually lives with you, and so on. If the child is a full-time student, they allow them in their reckonings as long as they are under 24 years of age. You can claim an earned income tax credit on your individual tax return, no matter which it is - 1040, 1040A or 1040 EZ. And if you work in the military, if you are not making the income needed, you can even add in your combat pay if it will help you make the cut.
Pages
▼