Earned Income Tax Credit or EITC as the Internal Revenue calls it is a special tax credit the U.S. government has provided for low income and moderate income individuals. Another way of putting it is, its money the government is giving low-income wage earner taxpayers, as a bonus for working hard for a low wage.
The government has significantly curtailed welfare in the United States, and minimum wage is far too often the norm for many hard working unskilled Americans. The government has provided a financial windfall or tax credit as it is called to make up for the huge disparity between low-income wage earners and the high cost of living in the United States. The problem is, many pople dont understand how they can get money back on their taxes they never paid in the first place, so many still do not benefit from the earned income tax credit and millions of dollars sit in the federal government coffers, unused.
Taxpayers who low-income wage earners can get this tax credit even if they have already filed their taxes. You can file an tax amendment.
There are specific qualifications that MUST be met in order to qualify for the earned income tax credit.
>Low-income wage earners MUST meet the following EITC requirements to receive the credit:
-The wage earner must have a valid Social Security Number
-The wage earner must have earned income from employment or from self-employment.
-The wage earner filing status cannot be married, filing separately.
-The wage earner 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 filing a joint return.
-The wage earner cannot be a qualifying child of another person.
The wage earner can qualify if he or she has no children but, if he or she does not have a qualifying child, he or she must:
-Be age 25 but under 65 at the end of the year,
-Live in the United States for more than half the year,
-Cannot qualify as a dependent of another person
-The wage earner cannot file Form 2555 or 2555-EZ (related to foreign earned income)
>EITC Thresholds and Limitations Special rules may apply--Current Tax Year 2005
>Earned income and adjusted gross income (AGI) must each be less than:
$35,263 ($37,263 married filing jointly) with two or more qualifying children;
$31,030 ($33,030 married filing jointly) with one qualifying child;
$11,750 ($13,750 married filing jointly) with no qualifying children.
>Tax Year 2005 maximum credit (money that will be paid to the wage earner):
$4,400 with two or more qualifying children;
$2,662 with one qualifying child;
$399 with no qualifying children.
Investment income must be $2,700 or less for the year.
A "Qualifying Child" - A "qualifying child" may enable a taxpayer to claim several tax benefits, such as head of household filing status, the exemption for a dependent, the child tax credit, the child and dependent care credit and the earned income tax credit. Prior to 2005, each of these items defined a qualifying child differently.
If you have already filed for your taxes you are still eligible for the Earned Income Tax Credit, and you can file an amendment.
