With tax season here, many question where and how they will file their taxes this season, and may not be aware of money-saving opportunities like the Earned Income Tax Credit.
The Earned Income Tax Credit (EITC) makes a major economic difference in the lives of over 26 million working low and moderate income Americans, according to a recent report released by the tax preparation industry.
The report also urged those who are now working at lower wages to make an effort to determine if they might have become eligible for the tax credit when planning to prepare their returns this year.
Steve Goodman, a tax agent from Liberty Mutual in Jefferson, said the EITC helps many in the area. He said it isn’t surprising for some to get back between $6,000 and $8,000 through the EITC and the Child Tax Credit.
“It brings a lot of money into the local economy this time of year,” said Goodman.
To qualify for EITC
“To qualify for EITC you must have earned income from employment, self-employment or another source and meet certain rules. Also, you must either meet the additional rules for workers without a qualifying child or have a child that meets all the qualifying child rules for you,” read information from the IRS.
Spouses filing a joint return must meet all of the following rules:
- Have a valid Social Security Number
- Have earned income from employment, self-employment or another source
- Cannot use the married, filing separate filing status
- Must be a U.S. citizen or resident alien all year or a nonresident alien married to a U.S. citizen or resident alien and choose to file a joint return and be treated as a resident alien
- Cannot be the qualifying child of another person*
- Cannot file Form 2555 or 2555-EZ (related to foreign earned income)
- Your Adjusted Gross Income and earned income must meet the limits shown on the Income Limits, Maximum Credit Amounts and Tax Law Updates Page
- Your investment income must meet or be less than the amount listed on the Income Limits, Maximum Credit Amounts and Tax Law Updates Page
According to the IRS, there are special EITC rules for members of the military, ministers, members of the clergy, those receiving disability benefits and those impacted by disasters.
Also, many persons with disabilities or persons having children with disabilities qualify for the Earned Income Tax Credit.
For the 2012 tax year, earned income and adjusted gross income (AGI) must each be less than:
- $45,060 ($50,270 married filing jointly) with three or more qualifying children
- $41,952 ($47,162 married filing jointly) with two qualifying children
- $36,920 ($42,130 married filing Jointly) with one qualifying child
- $13,980 ($19,190 married filing jointly) with no qualifying children
The maximum credit for the 2012 tax year:
- $5,891 with three or more qualifying children
- $5,236 with two qualifying children
- $3,169 with one qualifying child
- $475 with no qualifying children
Both the earned income qualifications for the EITC and the maximum credit a person can receive will increase in the 2013 tax year.
Free tax assistance
The EITC isn’t the only way to save money this tax season.
The Ashe County Library is offering free tax assistance for most people with under $51,000 in adjusted gross income. The program is called Volunteer Income Tax Assistance (VITA).
Each volunteer is certified by the IRS. Tax assistance will be offered on Monday, Tuesday and Saturday.
The Library also offers a print station open for individuals who want to do their taxes themselves.
Other locations offering free tax assistance include the State Employees Credit Union and the Ashe Senior Center. Call locations for eligibility requirements and more information.
Individuals and families with a combined income under $57,000 can also file their taxes for free on myfreetaxes.com/AsheLibraryTaxLinkFSA.