Families that are considered to be poor or low income are given assistance through the earned income credit, or EIC. The EIC is a tax credit that helps such families with low earnings to have a better standard of living. An EIC can translate into a substantial tax refund. This article will explain how you can decide if you are eligible for the EIC and provide tools to help calculate your refund.
The earned income credit is not only for families with children. Even single individuals can be eligible to receive this credit from the IRS, even though it will be for less. Many such single people are not aware that they could receive the EIC and do not even apply.
Although it is open to many people, some individuals will not meet the requirements to earn the EIC. People who obtain the EIC must be United States citizens, have a social security number, earn a taxable income, be over twenty-five years old, not file for taxes under the Married Filing Separately category, and have a child that qualifies. Meeting these requirements is the first step in receiving the earned income credit.
In order to obtain the EIC, you need to make a sustaining income. This income can come from freelance or self-employed work. The EIC program benefits people who are willing to work for their money.
This tax credit is easier to obtain if you have a child, but that does not mean that you will automatically get it. In order to receive the EIC on the basis of your child, the child must be under eighteen years of age, under age twenty-four and currently taking post-secondary classes, or over eighteen years of age with disabilities that are cared for by a parent.
Children will allow you to qualify for the EIC if they live with you for at least six months of the year. If the child's parents are separated, the only parent who can claim the child towards the earned income credit is the parent who currently lives with the child. The EIC can be qualified for by means of foster children as well. Any and all children who are used to obtain the EIC must have a valid social security number.
If a married couple wishes to receive the tax benefits of the EIC, they must file their taxes jointly. Separated couples cannot both claim their children for the EIC, so they will have to decide who will claim them. You can claim the earned income credit on any 1040 tax form.
You may qualify for the earned income tax credit without even being aware of it. You might very well be missing out on money that you are entitled too because of misconceptions regarding the EIC.