NH Earned Income Tax Credit

Workers can file for the EITC for the last three years. For example, a worker who was eligible for the EITC in 2003 but did not claim it can fill out a Form 1040X, “Amended U.S. Individual Income Tax Return,” and attach it to a copy of the 2003 tax return he or she filed that year. Workers claiming a child for the EITC also must fill out and attach Schedule EITC for 2003. For copies of prior-year forms, call 1-800-TAX-FORM.

Back to top.

What happens if a worker files for an EITC and the IRS finds out that taxes are owed?

The worker must pay whatever is owed. But:
• The EITC may be enough to cover the taxes owed.
• The IRS is usually willing to work out payment plans for back taxes.
• The worker may be able to make an “offer in compromise” that is less than the tax bill.

Back to top.

What about workers who did not file a return and discover they had been eligible for the EITC?

An eligible worker can file a return and claim the EITC for three back years. For example, in 2007 workers are filing taxes for 2006. If a worker failed to file or claim the EITC in the past, he or she could still file for 2005, 2004 and 2003. A worker must file a separate return for each prior year and, if claiming a child for the EITC, also fill out and attach the Schedule EITC for that year. A Form 1040X is not required. There is no late filing penalty, unless the worker owed income tax in the prior year. The amount owed the IRS will be deducted from the EITC. Workers who may owe taxes in excess of their EITC should seek assistance from a Low Income Taxpayer Clinic, accountant, or attorney and, if necessary, arrange a payment agreement with the IRS.

Back to top.

Will the IRS require additional information beyond what a worker provides with his or her tax return?

Generally, the IRS will not require any additional information. But, if information provided on the tax return or Schedule EITC seems questionable, the IRS may request additional documentation to verify the EITC claim. In such cases, the IRS will send the filer a questionnaire that specifies the type of documentation that must be submitted. For example, a filer may be asked to submit a copy of a qualifying child’s birth certificate. It is important that the name on the birth certificate match the name on that child’s Social Security card. If a child is over age 24 and permanently and totally disabled, proof of disability status could be requested. The IRS also may require documents verifying that a qualifying child actually lived with the filer at least half the year (or a full year if a foster child, for years prior to 2006). Filers claiming the EITC should not mail in any additional documentation with their tax returns unless such documentation is specifically requested by IRS. If additional information is requested, filers need submit only the documents specified. Exception: Workers whose EITC claim was disallowed in a previous year, but who now claim they are eligible, must attach Form 8862, “Information to Claim Earned Income Credit after Disallowance,” to their tax return in order to submit a new claim.

Workers who are in the test group for EITC Certification are required to submit an additional tax form and supply additional documents to submit an EITC claim.

Back to top.

Can self-employed workers get the EITC?

Yes. They will need to fill out additional forms to accompany their Form 1040 and Schedule EITC (if they were raising children in their home): Schedule C, “Profit or Loss from Business,” (or Schedule C-EZ) and Schedule SE, “Self Employment Tax,” (if their self-employment income is more than $400). Call the IRS at 1-800-TAX-FORM to get the necessary forms or download them from the IRS website at: www.irs.gov.

Back to top.