The Earned Income Tax Credit is a refundable tax credit designed to help taxpayers whose income is below $52, 427 per year. In 2014, as many as 28 million taxpayers and families received $66 billion in EITC; the average amount received in EITC was $2,400.
To find out if you qualify for the earned income tax credit, you may use the IRS EITC assistance. If you qualify, you can calculate the amount you’re eligible for. This number is based on your income, family size (number of dependents), and filing status. The credit limits for 2014 are:
• $2 to $496 with no qualifying children
• $9 to $3,305 with one qualifying child
• $10 to $5,460 with two qualifying children
• $11 to $6,143 with three or more qualifying children
Both W2 workers and the self-employed that earned $52,427 or less during 2014 can qualify for the EITC. Even those that do not owe any taxes for 2014 can file a tax return and claim the EITC to get a refund.
Some important factors that taxpayers should keep in mind before claiming the EITC are:
• You must have earned income (wages, tips, self-employed income). Retirement pensions and unemployment benefits are not considered earned income.
• You must have a valid Social Security number.
• Your investment income must be $3,350 or less.
• You must use a filing status of single, head of household, married filing jointly or qualifying widow or widower. If you are married filing separately, then you cannot get the credit.
Individuals that do not owe any taxes and cannot afford to hire a return preparer can easily prepare their tax return using preparation software, or by using free tax preparation help provided by the IRS.