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Earned Income Tax Credit Can Put Money in Your Pocket

You could be eligible to get more money back from the IRS-as much as $5,891.

If you earned less than $50,000 from wages, self-employment, or farming last year, you may qualify for a refundable tax credit called the Earned Income Tax Credit, or EITC. But you must file a federal income tax return claiming the credit to get it.

EITC can be a boost for working people, their families, and communities. Workers who experienced a drop in their earnings in 2012 may qualify for the first time.

The credit has been making the lives of workers a little easier for more than 37 years. Yet it remains little known, possibly because people move into and out of eligibility as their financial, marital, and parental statuses change. IRS estimates four of five eligible workers claim and get their EITC.

Unlike other tax credits, both EITC eligibility and the amount of tax credit you are eligible for is based on several factors. These include, the amount of your income, or combined incomes if married, whether you have qualifying children and how many. Workers without children also may qualify.

Filing status and income limits determine the amount of the credit.  You may qualify for EITC even if you had no federal tax withheld or are not otherwise required to file.
 
The credit is complex, but worth exploring. It's even more valuable if your state has a corresponding EITC tax credit.

The online EITC Assistant at www.irs.gov/eitc can help determine your eligibility and estimate the amount of your credit. Free help preparing your return and claiming EITC is available at volunteer income tax assistance sites. To locate a volunteer site, use the IRS VITA Locator tool or call the IRS at 1-800-906-9887.

Remember: if you are eligible, you must file a federal income tax return, even if you are not otherwise required to file, and you must specifically claim the credit to get it. Find more information about EITC at www.irs.gov or in your tax software package.

According to the IRS, rural and non-traditional families -- such as grandparents raising grandchildren -- childless workers, and non-English speaking taxpayers are among those who most frequently overlook the credit.

Link Information:

  • Earned Income Tax Credit -- www.irs.gov/eitc
  • Several Factors -- www.irs.gov/eitc; see Do I Qualify for EITC
  • EITC Assistant -- www/irs.gov/eitc; see EITC AssistaNT
  • VITA Locator Tool -- http://irs.treasury.gov/freetaxprep/ (a Google Map based tool)

 

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Last updated: 11/20/2012