The Earned Income Tax Credit is a federal initiative approved by Congress in 1975 to help direct money back to low- to moderate- income earners.
To qualify for the credit and free tax preparation, an individual with two or more children must have an income less than $34,458.
An individual with one child must have an income less than $30,338.
And a person or family without children must have an income less than $11,490. These amounts are each $1000 higher if a married couple files a joint return.
Children can include step-children, grandchildren, foster and adopted children and siblings if the taxpayer is the primary care giver.
The maximum tax credit a family could receive is $4,300.
Taxpayers and tax professionals should review the rules at the IRS website before attempting to claim the EITC.
DO YOU QUALIFY FOR THE EITC?
To qualify, you must meet certain requirements and file a U.S. Individual Income Tax Return, as described below, some EITC rules apply to everyone. There are also special rules for people who have children and for those who do not.
YOU MUST MEET CERTAIN REQUIREMENTS:
You must meet requirements such as, you must have earned income, a valid social security number, less than $2,650 in investments, and be a U.S. citizen or resident alien.
For the tax year 2004, you must have adjusted gross income of less than $34,458 ($35,458 if married filing jointly) with two or more qualifying children. And Income less than $30,338 ($31,338 if married filing jointly) with one qualifying child, and $11,490 ($12,490 if married filing jointly) with no qualifying children. ELIGIBILITY TEST FOR CHILDREN:
Your child must meet specific residency test.
At the end of 2004, you must have been at least age 25, but under age 65. You cannot qualify as the dependent of another person. You must have lived in the United States for more than half of 2004.
TAX CREDIT LIMITS FOR 2004:
Income and family size determine the amount of the EITC. The Earned Income Credit Table, which shows the credit amounts, is included in the Instruction booklet for Form 1040 and in Publication 596, Earned Income Credit at www.IRS.gov. For 2004, the maximum credit amounts are $4,300 for two or more children, $2,604 for one child, and $390 for no children. This is the money you will receive from the IRS as your credit or gift from the government.
About The Author: Lois Center-Shabazz is the author of the award-winning book, Let's Get Financial Savvy! And editor of the personal finance website www.MsFinancialSavvy.com. Sign up for my 5-week eCourse: "How to Maintain Income in Good Times and Bad", Go to http://www.msfinancialsavvy.com/free/newsletter_sign_up.htm
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