Wednesday, February 27, 2013

Earned Income Tax Credit (EITC)



EITC, the Earned Income Tax Credit, is a tax credit to help you keep more of what you earned. It is a refundable federal income tax credit for low to moderate income working individuals and families. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

Number of Qualifying Children in family
Earned Income & Adjusted Gross Income* is LESS THAN
2012 Maximum Credit
Married, filing jointly

 *Adjusted Gross Income includes all your income minus certain deductions. Find the amount of your AGI on line 36 on Form 1040, line 21 on Form 1040A, and line 4 on Form 1040EZ.

Taxable earned income includes:
  • Wages, salaries, tips, and other taxable employee pay;
  • Union strike benefits; 
  • Long-term disability benefits received prior to minimum retirement age;
  • Net earnings from self-employment if:
ü  You own or operate a business or a farm or

ü  You are a minister or member of a religious order or

ü  You are a statutory employee and have income. You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked.

Examples of Income that are Not Earned Income:

·         Pay received for work while an inmate in a penal institution 
·         Interest and dividends 
·         Retirement income 
·         Social security 
·         Social security disability insurance 
·         SSI 
·         Military disability pensions 
·         Unemployment benefits 
·         Alimony 
·         Child support

To get free help to determine if you qualify for EITC see the “Free Tax Help” articles previously on this blog.

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