The IRS estimates that up to 25% of taxpayers who are eligible for the Earned Income Tax Credit (EITC) don’t claim it because they don’t realize that they qualify. In fact, many of our clients who are eligible to claim this credit have either never heard of it, or they do not believe that they qualify. This is especially true of those who did not qualify for the EITC last year, but due to a change in their tax situation they are now eligible to claim the credit.
Because of this large oversight on the part of a good number of taxpayers (many of whom are in financial situations that would greatly benefit from this credit), the IRS has developed a list of facts regarding the EITC. Several of those facts are highlighted below:
- It’s easy to determine whether you qualify. The EITC Assistant, an interactive 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.
- If you qualify, you must file a federal income tax return and specifically claim the credit in order to get it – even if you are not otherwise required to file.
- Your filing status cannot be Married Filing Separately.
- You must have a valid Social Security Number. You, your spouse – if filing a joint return – and any qualifying child listed on Schedule EIC must have a valid SSN issued by the Social Security Administration.
- You must have earned income. You have earned income if you work for someone who pays you wages, you are self-employed, you have income from farming, or – in some cases – you receive disability income.
- Married couples and single people without kids may qualify. If you do not have qualifying children, you must also meet the age and residency requirements as well as dependency rules.
For more information regarding the Earned Income Tax Credit, please see IRS Publication 596.
For more information on taxes click here.
Enter your email address to receive updates from KNS Financial:
Or, to subscribe to our RSS Feed click here.