Earned Income Tax Credit ~ For the Low Income

The Earned Income Tax Credit (EITC) is an income tax benefit for people who earn low or moderate incomes. When you file a tax return, you may get a refund of federal taxes that are withheld from your paycheck. You may also get an additional refund, known as EITC.

Can I Get EITC?

If you work full-time or part-time, and if you earn less than a certain amount, you may get EITC.

For 2006, if you are single or married and have no children, you may get up to $412 if

· You are between the ages of 25 and 64; and,

· Your income is less than $12,120 (less than $14,120 for married workers);

If you have one child, you may get up to $2,747 if

· Your income is less than $32,001 (less than $34,001 for married workers); and

If you have two or more children, you may get up to $4,536 if

· Your income is less than $36,348 (less than $38,348 for married workers).

Do I Qualify For EITC?

You qualify for EITC if all the following are true:

ü You have earned income. Earned income is from wages, tips, and self-employment. Earned income is also from long-term disability paid by your employer. The following are NOT earned income: unemployment benefits, child support, Social Security benefits, pensions, alimony, TANF, food stamps, job training benefits, and interest.

ü You must file single, married filing jointly, or head of household. You cannot file married filing separately and get EITC.

ü You may not have investment income (like interest or dividends) of more than $2,800.

ü You must be a United States citizen or resident alien. You are a resident alien if you have a “green card” or if you have been in the United States for a certain period of time. You do not have to be a legal resident under the immigration laws to be a resident alien for tax purposes.

ü You and your spouse (if you are married) must have Social Security numbers that are valid for employment. Any child you claim for EITC must also have a Social Security number that is valid for employment. If you receive a valid Social Security number after you file your tax return, you can amend your tax returns for up to three prior years to claim the EITC. This is true if you used to have an Individual Taxpayer Identification Number (ITIN), or if you used an invalid Social Security number.

Does My Child Qualify Me to Receive EITC?

Your child must meet the following:

1. Be your child, adopted child, stepchild, eligible foster child, brother, sister,stepbrother, stepsister, or descendant of any of these;

2. Live with you in the United States for more than half the year; and

3. Be under age 19 or a full-time student under age 24 on December 31. Your child may be any age if she is totally and permanently disabled.

In most cases, you do not have to claim your child as a dependent to qualify for EITC.

Does My Child Qualify Someone Else to Receive EITC?

If you and your children live with your parents, either you or your parents may claim your children for EITC. You must decide which of you will claim your children, because only one person can claim a child for EITC. If you choose not to claim the EITC, another eligible relative living with your children may claim the EITC.

If you and your child’s other parent do not live together, and if your child lives with both of you, the parent with whom the child lives the longest may claim the child for EITC. If your child lives the same amount of time with each parent, the parent who earns the most money may claim the child for EITC.

If you have questions about who can claim your child for EITC purposes, you may ask a tax advisor or contact the Texas Taxpayer Assistance Project.

Facts About EITC

· You can get EITC if you have been paid in cash or by personal check, so long as you can prove you earned the money.

· You can get EITC if you are self-employed.

· You can get EITC if your employer did not withhold federal income taxes from your paycheck.

· If you did not file a tax return or claim EITC, it is not too late. You may be able to claim EITC for the past three years.

Do I Have To Wait To File Taxes Before I Can Get EITC?

No. You can get your EITC in each paycheck. Your employer can pay up to $1,648 in EITC each year. This means that you can get up to $137 extra in your paycheck each month. You should not ask for the advanced EITC if you work for yourself or you plan to marry during the year. You can get the advanced EITC by filling out a Form W-5 and giving it to your employer. The W-5 expires on December 31. You must file a new Form W-5 each year.

Will EITC Affect My Public Benefits?

No. EITC will not affect your public benefits like food stamps, low-income housing, TANF, SSI, and Medicaid.

If you are denied public benefits or your amount decreases because of the EITC, you should call: Texas RioGrande Legal Aid at 1-888-988-9996.

What If The IRS Denies My EITC Claim?

You may appeal. To appeal, prepare a written statement about why you qualify for the EITC. Attach documents that support your claim. If you do not appeal, you may not be able to claim EITC for the next two years. If the IRS decides that you fraudulently claimed EITC, you may not be able to claim EITC for the next 10 years!

You must file Form 8862 with your tax return if the IRS denied your EITC in the past two years.

If you want help with your appeal, contact the Texas Taxpayer Assistance Project at 1-888-988-9996.

NOTE: This information cannot take the place of advice from an attorney. Each case is different and requires individual advice. You should contact an attorney if you need representation on a tax matter or if you have questions. Pursuant to Internal Revenue Service Circular 230, we are required to advise you that if there is any tax advice contained herein, it is not intended to be used, and cannot be used by the addressee or any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The Texas Taxpayer Assistance Project is funded in part by a grant from the Internal Revenue Service.

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