Earned Income tax Credit is an endeavor of the IRS to help millions of Americans. People need to review their credit and see if they qualify. Existing since 1975, it is one of the most substantial tax refund programs for taxpayers.
The Earned Income tax Credit aims to reduce the burden of social security taxes, which encourages people to work. This qualifies people for a refund, even if they do not pay tax. Many people are confused about the EITC, and we hope to clear it up with this article.
It is wrong to think that not working qualifies you for the earned income tax credit. You, however, have to work to get a refundable tax credit like EITC. People that are not working do not qualify for EITC at the expense of working-class people. When you consider the name: Earned Income Tax Credit, it applies to people earning income. Earned income includes wages, salaries, tips, benefits, etc. In other words, you have to work or be working to get earned income.
Earned Income, however, does not include income in which you are not actively involved in (passive income). Examples of passive incomes are retirement income, interests, and dividends, unemployment benefits, alimony. Child support is also not an earned income.
Forget whatever you have read on Facebook or other social media platforms. As long as you have earned income, you, alongside other members of your family, must have a valid social security number. Even the qualifying child must have one as well. The SSN must be issued before your tax return date expires. This allows you to qualify for EITC. As a result, you being an alien does not disqualify you.
Even if you are a resident alien, once you are in the country for a whole year, you are qualified.
There are some requirements that you must meet to qualify for EITC. Also, you must file a federal income tax return for the tax year. This applies even if you don't owe any tax, or you are not required to file a tax return.
Many people do not understand this, and it robs them the opportunity of having access to their earned income tax credit. As a result, year in, year out, there are billions of unclaimed EITC refunds with the IRS.
Some criteria qualify you for EITC, and none of them stipulates the presence of children. With earned income and a valid social security number, you can file under any of the following statuses: qualifying widow(er), married filing jointly or head of household. You, however, do not qualify if you are married and filing separately.
There are also some income qualifications you should meet. You shouldn't file form 2555, form 2555-EZ, foreign earned income, foreign earned income exclusion, and your tax year income must be $3,500 or less. The presence of kids does not matter even though the amount of your tax is a factor of your income and the number of kids that qualify.
Indeed, the rules guarding the EITC could be tricky. There could be an age restriction, and special rules apply to members of the clergy, military and ministers, victims of disasters, and people on disability benefit. As a result, it is essential to ask for help in understanding how earned income tax credit applies to you.
Earned income tax credit is one of the simplest ways for workers to have some extra dollars. It is legal and involves no special duty on your part. With an income of $55,952, you can see if you qualify by using the EITC Assistant software on the IRS website at www.IRS.gov/eitc.
The EITC Assistant is also available and can help you know if you qualify or not. It can also help you determine if any of your kids qualify. It is also an excellent tool to estimate what you will get as the EITC. For people that might not be eligible, the EITC assistant also explains why.
Frank Penn