Today is Earned Income Tax Credit (EITC) Awareness Day. MVLS wants you know about a tax credit that has made the lives of working people a little easier since 1975. The EITC credit applied to your taxes can be a boost for individuals who earned $53,505 or less in 2016. Yet the IRS estimates that 1 out of 5 eligible taxpayers fails to claim their EITC each year on their taxes.
Here are 5 things to know about this credit:
- EITC is valuable. The EITC not only reduces the federal tax you owe, but could result in a refund. The EITC credit is based on your earned income and increases if you have qualifying children in your household. Last year, the average credit was around $3,186 for a family with children. If you qualify, the credit could be worth up to $6,269, depending on the number of children you have.
- Review your eligibility. If your financial, marital or parental situations change from year to year, please review the EITC eligibility rules. Just because you didn’t qualify last year doesn’t mean you won’t this year.
- File your return. If you are eligible for the EITC, you must file a federal income tax return to claim the credit – even if you are not otherwise required to file.
- Know the qualifications.
- You do not qualify for EITC if your tax filing status is Married Filing Separately.
- You must have a valid Social Security number for yourself, your spouse (if filing a joint tax return), and any qualifying child listed as a part of your household.
- You must have earned income. You have earned income if you are paid wages, are self-employed, have income from farming or receive disability income.
- Married couples and single people without children may qualify. If you do not have qualifying children, you must also meet age and residency requirements as well as dependency rules.
- 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. Even if you make this choice, your combat pay will remain nontaxable.
- Use the EITC Assistant. It’s easy to determine if you qualify. The EITC Assistant, a helpful tool available on IRS.gov, removes the guesswork from eligibility rules. Just answer a few simple questions to find out if you qualify and estimate the amount of your EITC.
To get FREE, in-person tax preparation from a nonprofit Volunteer Income Tax Assistance site, please call 2-1-1 or visit their website to find the center closest to your neighborhood.
If your application for the EITC is denied, or if the IRS wants to question you about it, don’t hesitate to apply for help from MVLS.