Happy New Year! Earned Income Tax Credits, and How the Poor May Have Not Been Entirely Screwed by Washington. We'll See

Happy New Year's, peeps!  Among the hooha about raising taxes on the top 2% in the fiscal cliff negotiations, it was little noted that the expansion of earned income tax credits instituted in 2009 were scheduled to expire.  It appears that the deal struck by the Senate late last night will preserve this expansion.  **Update** The final law passed, extending the current EITC expansion for five years.

As noted in this blog before, the earned income tax credit is a tax break available to the working poor, giving them not only a deduction, but an actual credit on earned income.  It was established in the 1980s, and expanded at various times, the latest being in 2009.  In the new fiscal cliff agreement, it (hopefully) will be preserved--if the House agrees to the package.  We'll see.

However, 24 states also have an EITC for poor and moderate income wage earners.  Click here to find out if your state has an EITC.  To find the tax office for your state and its current tax forms, check here, courtesy of the Federation of Tax Administrators.  If you are a low to moderate income person, you may also find someone to prepare your taxes for free as well, or call 1-800-906 9887 (for VITA tax services) or 1-888-227-7669 or tax services for the elderly.

 

The Tax Break Just for Poor and Moderate Income People...The Earned Income Tax Credit (EITC)

People are now thinking about filing taxes for the past year.  Please remember that if you are a low-income person, or even a moderate income person supporting children or a permanently disabled person, you may qualify for the earned income tax credit.  It may be worth looking into.

You can start looking into the EITC on this page. It's the overview of the program.  If you dig around a little you can find this page that gives you the income limits and maximum tax credits for the tax year 2011 (the one you are going to file for in early 2012). It's frustrating, because as of December 27, 2011, the page only had a EITC assistant up to the tax year 2010.  But if you try the page later, it may have a more current EITC assistant. 

As noted, you don't have to have children to  qualify for this if your earned income is low enough.  Here, you can find out what qualifies as "earned income."  You can also find out who qualifies as an eligible child for EITC purposes here.  And if you are supporting a permanently disabled child of any age, they may count as an eligible child. 

However, you can't get the tax credit if you don't file--and you must file for the credit to get it. For couples filing jointly with three or more qualifying children (and incomes up to more than $49,000), they may be able to get a credit of over $5,000.  Who wants to leave that kind of money on the table?  Of all the "free money" hype, this one is real, and really helps people who need it. Look into your earned income tax credit options.

Free Help Filling Out Your Taxes

It's tax time, and despite the delays in tax forms rolling out (due to the long congressional negotiations on taxes), there are some things that are holding steady.  One is the availability of free help in filling out taxes for low to moderate income people. For people making $49,000 or less a year, you may be eligible to have your taxes completed by volunteers through the VITA (Volunteer Income Tax Assistance).  The service is offered at more than 7,000 sites around the country, and can be found at this site.  And don't be shy about calling your local public library to see if there are more where you live--many may have sprung up after this listing was compiled.  Find your nearest site and make an appointment, and bring all the paperwork described at the website.  Or call 1-800-906-9887 for more on the program.  As noted on the site, there is also tax help available for the elderly, and for military personnel. AARP also provides free tax return work.  You can find a location near you here.   In Toledo, you can see these free  VITA tax sites for 2011.

For more places that can help with your taxes in several states (Arkansas, Florida, Indiana, Kansas, Mississippi, Ohio, North Carolina, South Carolina, and Pennsylvania), see the Benefit Bank.   Put in your zip code, and it shows you places where you can sit down with someone one on one and find out about benefits, and where you can get tax filing help.  These people are especially trained to help low-income people get the most out of their tax return.    See this site for free tax preparation for military members and the elderly, too.  


And remember the biggest tax friend that many low and moderate income earners will ever have: the Earned Income Credit.  One of the good things about the tax compromise in December is that some generous EIC benefits have been extended.  If you are a lower-income working person with more than 1 eligible child, you definitely need to check your eligibility here.  But you don't necessarily have to have children to be eligible.  But you should check it out!

Finally--EITC Information for Tax Year 2009

I knew the IRS would come through if I waited long enough--the numbers you need to know for Earned Income Tax Credit qualification. I pussyfooted around in my last post because I could not find where the IRS was hiding the exact numbers for 2009, but here they are. If you have no children, and are filing single, you must make less than $13,440 in earned income ($18,440 if married and filing jointly). But if you have one "qualifying" child (see the IRS webpage), that figure jumps to $35,463 for singles (and $40,463 for married couples filing jointly). There is also a temporary increase in the EITC for tax years 2009 and 2010 because of the ARRA (stimulus act).

Resolve to Get Some Real Free Money

If you are a low income person with earned income, resolve to get some real money from the government this year. No, not from the “free money” losers on infomercials—from the earned income tax credit (EITC). It is the tax credit (NOT a deduction. It’s way better. A deduction just reduces the amount of your income the government can tax. A credit cuts down on your actual tax bill, and can create a refund—or sweeten the refund.) to help out low and moderate income people. In 2008, it was responsible for a payout of over $49 billion for over 23 million people. But if you don’t apply for it, you can’t get it.

Contrary to what you might think, you DON’T need a child to qualify. However, you can qualify with a higher income if you have at least one child. And you don’t need to be a math wizard to figure out the forms. You can get totally FREE help in filling out your income taxes, too. VITA (Volunteer Income Tax Assistance) is available for low-income (up to $49,000), disabled, elderly or those with a poor grasp of English. These volunteers are trained to help you find your EITC if you qualify, and they are available all over the country. To find the nearest one so that you can set up an appointment, call 1-800-906-9887.

And you may not have to settle for just the federal EITC. Twenty two states and the District of Columbia have them as well. See if your state is one, and see if you can get a break—or a refund—on your state income taxes, too. And Happy New Year!

Don't Walk Away From Free Money from the IRS

The earned income credit (EIC) is a great feature in U.S. tax law that allows low and moderate income working taxpayers a chance to get some money back in these tough times. Contrary to what many believe, you do NOT have to have children in your household to qualify for this. You do, however, have to possess a valid Social Security number and have income earned from a job or self-employment. To find out if you qualify, check the IRS web page for more information.

Not only can you get money from the IRS, you can get free help filling out your taxes. In the Toledo area, call 211 and ask for the schedule of VITA volunteers--their times and locations--and set up an appointment to get your taxes done by people who can help you qualify. Also, if you live in Ohio, Pennsylvania, Arkansas, Mississippi, Kansas, or Florida, check out the Benefit Bank. Put in your address, click in the box marked "taxes," and you will get a list of nearby places that offer tax assistance.