Earned Income Tax Credit (EITC)

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One of the largest benefit programs for working taxpayers is also one of the most overlooked tax credits. It’s called the Earned Income Tax Credit and, as the name implies, it’s for people who work for a living but don’t make a lot of money.

Last year, EITC returned more than $5 million to Ohio residents. Yet, IRS estimates that up to one in four eligible taxpayers fail to file and claim their credit.

You may qualify if your income was under $43,279 last year and you, or your spouse, had income from wages, self-employment, farming, or, if under the minimum retirement age, from disability retirement benefits paid under an employer plan. The amount of your EITC could be as much as $5,657 depending on how much you earned, your filing status, whether you have children, etc.

To get the EITC you earned, you must 1) file a federal income tax return and 2) claim the EITC.

Many communities have volunteer income tax assistance sites or local IRS Taxpayer Assistance Centers, which will compute your EITC and prepare your return without charge. 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. Locate an IRS Taxpayer Assistance Center in the blue pages of your telephone directory.

Find more information at www.irs.gov, Keyword: EITC. The online EITC Assistant can help determine your eligibility and the amount of your credit.

If you’re like millions of Americans, you work hard but don’t earn a high income. The federal government has several resources including the Earned Income Tax Credit (EITC) that can help you and your family. The EITC is essentially a tax credit for low-income workers who meet certain qualifications, which usually means more money in their pockets. If you qualify, you could pay less federal income tax, pay no tax or receive a refund.

The Internal Revenue Service (IRS) and its community partners are working to increase EITC participation among taxpayers who have low incomes and meet EITC eligibility rules. We know the rules can be complicated and we want to help you understand all the eligibility requirements.

Claimants must have a valid Social Security number. In addition, one must meet certain residency and filing criteria, including following guidelines for a qualifying child. The following are income requirements for 2009:

A taxpayer’s total earned income must be at least $1 and their earned income and adjusted gross income (AGI) must both be less than:
• $13,440 with no qualifying child ($18,440 if married, filing jointly)
• $35,463 with one qualifying child ($40,463 if married, filing jointly)
• $40,295 with two qualifying children ($45,295 if married, filing jointly)
• $43,279 with three or more qualifying children ($48,279 if married, filing jointly)
• Investment income cannot be more than $3,100.

If you think you might qualify for EITC and would like assistance, you can call
1-800-829-1040 or go to www.irs.gov/eitc and select “EITC Assistant.”

Now, a "qualifying child" must:

Be younger than the taxpayer claiming that child unless the child is disabled and

Not have filed a joint return except to claim a refund

Also, If the same child is a qualifying child of a parent and another relative, the person who is not the parent can claim the child only if their AGI is higher than the AGI of any parent of the child.

For more information on whether a child qualifies you for the EITC, see Publication 596 at http://www.irs.gov/publications/p596/index.html, Chapter 2, Rules If You Have a Qualifying Child.