Do You Qualify for the Earned Income Tax Credit?

Families are struggling in these tough economic times.  But there is a federal tax credit, the Earned Income Tax Credit or the EITC, that can be a valuable resource for low to moderate income working families.  In 2007, $48 billion was returned to working individuals through the EITC.

The EITC is a refundable federal income tax credit for low to moderate income working individuals and families who can use it to generate a refund even if they have no tax liability. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF)

How do I know if I qualify for the EITC?

A: To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return. The Earned Income Tax Credit (EITC) is a refundable credit that is available to certain individuals and families who have low-to-moderate levels of earned income (wages, salary, tips, bonuses & net earnings from self-employment) and are taking care of at least one or two minor children. In certain cases, a taxpayer with low earned income and no children may also qualify.

The IRS has a variety of tools available to see if you qualify. You can access them at the IRS EITC Resources page.

Check out this opportunity if you prepare your own taxes or ask your tax preparer if you might quality.

Prepared by:

Marcia Jess, CFCS

County Extension Educator

Erie Basin EERA