Here’s Another Tax Credit You Might Not Know You Can Claim

Let’s see if you might qualify.

Last year, over 23 million people took advantage of a tax break called the “Earned Income Tax Credit.”  And the IRS handed down $50 billion in benefits.

Want your own personal stimulus?  Keep reading and check to see if the Earned Income Tax Credit (EITC) can put some dollars in your pocket.

 Who qualifies for the Earned Income Tax Credit?  It depends on a few criteria:

1. You must have a valid Social Security Number.
2. Your filing status cannot be married, filing separately.
3. You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
4. You cannot be a qualifying child of another person.
5. You must not have filed a form 2555 or 2555-EZ (related to foreign income).
6. You may claim no more than $3,100 in investment income for the year 2009 to qualify.

In addition, you must have earned income from an employer or self-employed income. Your adjusted gross income (AGI), together with the number of qualifying children you claim, will be key in determining your eligibility and the amount of the credit that you may receive. For 2009, your AGI must be:

1. Less than $43,279 ($48,279 for married filing jointly) if you have three or more qualifying children.
2. Less than $40,295 ($45,295 for married filing jointly) if you have two qualifying children.
3. Less than $35,463 ($40,463 for married filing jointly) if you have one qualifying child, or
4. Less than $13,440 ($18,440 for married filing jointly) if you do not have a qualifying child.

The maximum credit you are eligible to receive is:

1. $5,657 with three or more qualifying children
2. $5,028 with two qualifying children
3. $3,043 with one qualifying child
4. $457 with no qualifying children

This tax credit can be confusing, so many taxpayers who handle their own returns fail to claim it.  Many miss out because they do not file a return at all.   A tax return must be filed in order to claim the EITC.

If you fall into one of the groups below and therefore think you do not qualify, check with a tax practitoner or check the IRS guidelines to be absolutely certain.

1. A worker without qualifying children.
2. Someone whose earned income falls below the threshold required to file a tax return.
3. A person with disabilities.
4. A nontraditional family, such as grandparents raising grandchildren.

To help taxpayers determine if they are eligible for the credit, the IRS has developed an EITC online assistant. The assistant will walk you through a series of questions to figure out whether you might qualify for the credit.  The IRS strongly suggests you use one of their free service centers or a reputable preparer to help you calculate the credit.  Go to this IRS link here to locate a company that will do a free file for you.

The Earned Income Tax Credit is NOT restricted to Federal income tax.  For 2009, 21 states offer some form of EITC, including New Jersey.

Don’t miss out on the opportunity to claim credits for which you qualify and are entitled. This your stimulus.  You can drastically reduce your tax bill OR  you may even get a big refund.

To further assist Earned Income Credit taxpayers, Saturday service will be offered by 167 IRS assistance centers on February 20, 2010. Click here to find a location near you.

The IRS provides assistance in Spanish here.

With so many job losses and so many people under-employed, it is expected that many more taxpayers will qualify for the credit this year.  So take a few moments to inquire.  If you don’t qualify, do a good deed and pass the information along to someone who might.

If you bought a home and are eligible for the Home Buyer Tax Credit, check here and here for more details.

Lots of people file their own taxes using online programs.   And you can get the H & R Block Deluxe Online Tax Preparation Software for FREE.     Sign up for LifeLock® Service and get H&R Block At Home Deluxe Edition for free!  (Offer valued at $44.95).  Use code FEBRUARYTAX.

Tagged as: Tax Credit

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