The new formula for the Earned Income Tax Credit could mean larger refunds for millions of taxpayers, many of whom may be eligible for the first time because of the difficult economy.
Difficult economic times may mean more people are eligible for EITC, because of reductions in their income last year.
Many Americans experienced financial hardships last year. People may be eligible for EITC for the first time and really should check out their eligibility. This is a significant credit that can make their lives a little easier,” said IRS Commissioner Doug Shulman.
IRS research indicates that even in better times, one in four eligible taxpayers failed to claim Eaterned Income Tax Credit.
Eligibility requirements can be complex. Those missing out include people who have earned income but may not have a filing requirement, non-English speaking workers, non-traditional families, the homeless, childless workers and rural residents.
For example, people over age 65 usually are not eligible. However, if they are raising a grandchild who meets certain requirements, they may be eligible for EITC.
Workers who do not have a child or who do not live with their own child may be unaware that they still are eligible for a credit.
Military families also have the options of calculating combat pay or leaving it out, whichever may be more beneficial.
For the 2008 tax year, the maximum EITC is $4,824 for a family with two or more children; $2,917 for a family with one child and $438 for a childless taxpayer. (Please see Fact Sheet 2009-9 for all eligibility requirements.)
Generally, to be eligible for EITC, your earned income and adjusted gross income (AGI) each must be less than:
$38,646 ($41,646 married filing jointly) with two or more qualifying children;
$33,995 ($36,995 married filing jointly) with one qualifying child;
$12,880 ($15,880 married filing jointly) with no qualifying children.
The maximum amount of investment income is $2,950 for tax year 2008.
For families, there also are certain requirements that must be met for child residency and relationship.
Also, unemployment benefits are considered in adjusted gross income (AIG) calculations, but are not considered earned income.
“The IRS wants all eligible taxpayers to claim this important tax credit. We also want people to know that free help is available. There are thousands of volunteers staffing free tax-help sites nationwide. And many professional tax preparers donate their time and services to low-income taxpayers,” said Shulman.
Tax Assistance Centers opening Saturday
The IRS will open 172 Taxpayer Assistance Centers beginning Saturday January 31. The special Saturday assistance also will be available on Feb. 7 and Feb. 21. A list of centers for EITC Awareness Day is available at IRS.gov, under “Contact My Local Office.”
EITC claimants are eligible for free tax preparation services provided at nearly 12,000 volunteer sites nationwide. They can also use Free File through IRS.gov if they wish to prepare their own returns. Free File offers a choice of free tax preparation software or fillable forms and free electronic filing but only through www.irs.gov.
Nearly 70 percent of all EITC returns are prepared by a third party or tax professional. Tax preparers and taxpayers can find a wealth of information at EITC Central, which includes statistics, online tools and marketing products. Both also can use the EITC Assistant, which is an easy-to-use interactive tool to help determine if the taxpayer is qualified for EITC. The EITC Assistant also is available in Spanish.
for more details: