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Earned Income Tax Credit Article
The Earned Income Tax Credit (EITC)
Extra money for low- and moderate-income people who work
Do you struggle to get by from paycheck to paycheck? Then you should know about the Earned Income Credit (EITC), a special tax benefit for people who work full-time or part-time. Millions of low wage taxpayers qualify. Even if you are not a U.S. citizen, you may still qualify for Earned Income Credit.
Last year, New Hampshire residents qualified for more than $8 million in Earned Income Credit that went unclaimed.
What is Earned Income Credit?
The EITC is a special tax benefit for working people who earn low or moderate incomes. If you fall into this category, the EITC can help reduce your taxes and increase your income.
If you qualify for EITC and file a federal tax return, you can get back some or all of the federal tax withheld from your pay during the year. You may also get some cash back from the IRS. Even if you didn’t earn enough to pay an income tax, you may qualify for EITC.
Who can get EITC?
If you worked full-time or part-time at some point in 2006, you can qualify for the EITC depending on your family income which must fall below the following income guidelines:
Family size |
Single |
Married filing jointly |
Two or more children |
$36,348 |
$38,348 |
One child |
$32,001 |
$34,001 |
No children |
$12,120 |
$14,120 |
Source: Internal Revenue Service
How much is it worth?
The chart below shows the maximum EITC a family can earn. Your family income determines the actual amount of EITC you receive.
Family size |
Maximum EITC |
Two or more children |
$4,536 |
One child |
$2,747 |
No children |
$412 |
Source: Internal Revenue Service
Who is a “qualifying child”?
The IRS considers a qualifying child:
- any child who lived in your household for more than half of 2006,
- is your son, daughter, adopted child, grandchild, great-grandchild, stepchild, or eligible foster child, and who also
- meets one of the following criteria:
- Was younger than age 19 at the end of the tax year, or
- Was a full-time student under age 24, or
- Was permanently and totally disabled at any age during the year
How do you get the EITC?
- Workers raising a qualifying child in 2006 must file either Form 1040 or 1040A and must fill out and attach Schedule EITC. Workers with children can’t get the EITC if they file Form 1040EZ or do not attach Schedule EITC. Married workers must file a joint return to get the EITC.
(See below if you want free help filing your federal tax return.)
- Workers who didn’t raise a qualifying child in their home in 2006 can file any tax form - including the 1040EZ. These workers write “EITC” (or dollar amount of their credit) on the Earned Income Credit line on the tax form. The do not file Schedule EITC.
- You must provide a correct name and Social Security number for every person listed on the tax return and Schedule EITC. If this information is incorrect or missing, the IRS will delay the refund.
- Workers don’t have to calculate their own EITC; if they choose, the IRS will do it for them.
Workers raising children can get part of their EITC in their paychecks
Workers raising children can get part of their EITC in their paychecks throughout the year. The rest will come back as a check from the IRS after the worker files a tax return. This is called the Advance EITC payment option.
Learn more about it from the IRS Advance Earned Income Credit Questions and Answers page at:
http://www.irs.gov/individuals/article/0,,id=96515,00.html
FREE help filing your tax forms
Many families that apply for EITC pay someone to complete their tax forms. This can cost $55 to $200 or much more. Getting a “quick tax refund” may cost you more than you will get back!
Low-income workers can get free help with tax preparation through local offices throughout New Hampshire.
The IRS certifies volunteers to provide free tax help through the Tax-Aide Program [http://www.aarp.org/money/taxaide/] of an organization called the AARP.
To find the Tax-Aide Program location nearest you, go to this Website [http://www.aarp.org/money/taxaide/taxpreparation/Articles/a2004-01-22-findtheaarp.html], or call 1-888-227-7669.
You can also call the New Hampshire Help Line at 1-800-852-3388 for a referral to a free tax preparation site nearest you.
Does the EITC affect eligibility for other public benefits?
No. The money you receive as EITC doesn’t count as income in determining your eligibility for benefits like Temporary Aid to Needy Families (TANF), Medicaid, food stamps, the Women, Infants and Children (WIC) program, supplemental social security (SSI), or public or subsidized housing.
Can immigrant workers get the EITC?
Many legal immigrants can qualify for the EITC, as long as they meet the eligibility requirements. For more information, call 1-800-TAX-1040.
For more information:
IRS Earned Income Tax Credit Questions & Answers
http://www.irs.gov/individuals/article/0,,id=96466,00.html
IRS Tax Topics about Earned Income Tax Credit
http://www.irs.gov/taxtopics/tc601.html
IRS Frequently Asked Questions about “Qualifying Child” rules
http://www.irs.gov/faqs/faq8-1.html
Information en espanol: Crédito por Ingreso del Trabajo(EITC) http://www.irs.gov/espanol/article/0,,id=119799,00.html
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