Earned Income Credit: How to Become Eligible
Families that are considered to be poor or low income are given assistance through the earned income credit, or EIC. The EIC is a tax credit that helps such families with low earnings to have a better standard of living. An EIC can translate into a tax refund of anywhere between $400 and $4,500. This article will explain how you can figure out if you are eligible for the EIC.
Some think that this credit is synonymous with having children, but those who have no dependents can also qualify and receive an earned income credit from the IRS. Single workers with no dependents can earn a much smaller sum of the tax credit. In error, they don’t claim it or even ask about it on their taxes.
The earned income tax credit isn’t available to everyone. Here are the requirements: earn a taxable income, have a child that qualifies, file taxes under any category except Married Filing Separately, older than twenty-five years of age, a social security number, and be a United States citizen. Once you meet these requirements, you are well on your way in the process.
In order to obtain the EIC, you need to make a sustaining income. This income can come from freelance or self-employed work. The EIC program benefits people who are willing to work for their money.
Having a child increases your chances of receiving a credit, but they don’t automatically qualify you for it. Children under eighteen qualify as eligible. A disabled child over eighteen years of age, in the care of a working parent, also meets this requirement. A child enrolled in a school of higher education can be as old as twenty-four and their parent(s) can still receive the tax credit.
The child has to live with you for at least half of the year to be considered a qualifying child. Foster children count in this equation, too. All children need a valid social security number. Custody issues can make things complicated when it comes to the children. Only the parent who still lives in the primary residence with the child can claim them towards qualifying for the earned income credit.
If a married couple wishes to receive the tax benefits of the EIC, they must file their taxes jointly. Separated couples cannot both claim their children for the EIC, so they will have to decide who will claim them. You can claim the earned income credit on any 1040 tax form.
Whether you know it or not, you may qualify for the earned income tax credit. Assuming that you need to have a child or enough income to file a return could be costing you money from the government.
Filed under: Business