According to the IRS one in every four eligible taxpayers do not claim their Earned Income Tax Credit (EITC). This often overlooked tax credit is also one of the largest credits available to taxpayers. This year, the maximum EITC is $6,143 and that is a LOT of money to leave on the table.
The maximum amount of income you can earn and still be eligible for this credit is higher than you think. Married taxpayers with three or more children may be able to claim the credit if their income is less than $52,427. Even married taxpayers with no children can claim a lesser credit if their income is below $20,020.
Another reason so many don't claim the credit is as simple as the taxpayer didn't earn enough money to have to file a tax return. Rule number one when it comes to EITC is that you MUST file a tax return. If you fall into one of these groups, chances are you also routinely miss or overlook the EITC credit each year or many years in a row:
- Seniors and Retirees (who do have some earnings) and are caring for grandchildren;
- Taxpayers with wide income swings from being laid off or displaced from a job pushing their income lower;
- Military taxpayers and ex-military - combat pay has some unique EITC options;
- Lower income taxpayers with income below the "must file tax return" level -can still file and get the EITC; and,
- Young single taxpayers who are simply NOT aware of the credit
Then there are other eligibility requirements such as, taxpayers must earn income within specific guidelines based on their household size. Taxpayers must have earned income from a "regular" job (one where you receive a W-2) or self-employment income, investment income must be less than $3,350 and all individuals must have a Social Security number. For example, married taxpayers with three (or more) qualifying children must have earned income of less than $52,427, and use the married filing jointly status. Of course, there are other requirements, but these are the main ones.
It might be worth reviewing your prior-year tax information to see if you could have taken the credit. If you think this could apply to you, act now because your time is running out; after April 15, 2015 unclaimed funds from 2011 can't be collected. Have your local Tax Pro review your prior-year returns to see if you could have taken the credit, if so, it is likely worth amending your returns to claim the credit.
If you are uncertain whether you qualify or not, you should seek the assistance of an experienced and trained tax professional or check out the cool new IRS tool, EITC Assistant, at IRS.gov to see if you are eligible to claim the credit.
If you find that you do qualify, you will have even more reason to celebrate EITC Awareness Day on January 30, 2015!