Would you want to miss out on a good thing? Especially something that could save you money? You could be if you’re missing out on one of the biggest opportunities to get a break on your taxes…EITC!
EITC doesn’t just cut the amount of tax you owe. It can also score you a refund, and in some cases a refund that’s more than what you actually paid in taxes!
Recent changes expanded something called the Earned Income Tax Credit (EITC)—an important tax credit program for workers with low to moderate incomes.
The IRS says there are many households that are eligible to claim the break but fail to take it. Could yours be one of them?
If your wages put you in a low to moderate income bracket and you meet the qualifications you could be missing out if you’re not claiming EITC.
Taxes are confusing and it can be even more confusing for most people to figure out if they qualify for EITC. But if you are a working family or individual in Southeastern Pennsylvania or Southern New Jersey, our professional experts can help you understand EITC and whether you qualify for it. The amount you receive depends on your income and the number of children you may have.
For the 2019 tax year, the earned income tax credit can earn you as much as $6,557. In general, the less you earn, the larger the credit. And families with children often qualify for the largest credits.
To qualify for EITC you must meet certain basic requirements:
- You, your spouse, and any qualifying children all have to have Social Security numbers.
- You can’t use the married filing separate filing status.
- Your investment income for the year must be $3,450 or less.
- You have to have at least $1 in earned income for the year (which includes wages, salaries, tips, and other pay earned from employment, self-employment income, and long-term disability benefits).
Add up your income.
While you have to have at least some earned income to qualify, you can’t exceed the income limits set by the credit.
There are different income limits based on your filing status and on the number of qualifying children you have. The child must be related to you as a son, daughter, adopted child, stepchild, foster child, grandchild, sibling, or descendant of a sibling; they also have to be younger than 19 (or younger than 24 if a full time student) and live with you more than half the year.
Calculate your credit.
If you meet the basic requirements to claim the credit, you have to figure out just how much of a credit you can claim. The maximum amount for EITC is based on how many qualifying children you have. For 2019, the maximum credit available is as follows:
- $6,557 with 3 or more qualifying children
- $5,828 with 2 qualifying children
- $3,526 with 1 qualifying child
- $529 with 0 qualifying child
There are special EITC rules for members of the military and the clergy, as well as for people who have disability income or who have children with disabilities. EITC has no effect on certain welfare benefits. Any refund you receive because of EITC generally will not be considered income when determining whether you are eligible for, or how much you can receive from, the following benefit programs:
- Temporary Assistance for Needy Families (TANF)
- Medicaid and Supplemental Security Income (SSI)
- Food stamps
- Low-income housing
Yes, it takes some work to claim this credit, and sometimes it can delay your refund. But given how much money you stand to make from it, EITC is well worth the work and the wait.
Why wouldn’t you contact experts who will prepare your taxes for free to find out if you can benefit from this major tax break?