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Is This Tax Credit For You? |
| ARA Content |
(ARA) - Millions of Americans forgo critical tax relief each year by failing to claim the Earned Income Tax Credit (EITC), a federal tax credit for individuals who work but do not earn high incomes. Taxpayers who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund. In 2004, an estimated 21 million taxpayers received approximately $37.5 billion in EITC.
"The EITC helps hardworking taxpayers, yet each year an estimated 25 percent of people who qualify don't claim the credit," says David R. Williams, Director, Earned Income Tax Credit at the Internal Revenue Service. "At the same time, there are millions of Americans who have claimed the credit in error, many of whom simply don't understand the criteria. That's why the IRS is working to make it easier for taxpayers to understand whether they are eligible."
To claim the credit, you do not need to have children. If you have children, they must meet the relationship, age and residency requirements to claim the credit. If you were employed for at least part of 2004, you may be eligible for the EITC based on these general requirements:
* You earned less than $12,490, did not have any qualifying children and were at least age 25 but under age 65 on Dec. 31, 2004
* You earned less than $31,338 and have one qualifying child
* You earned less than $35,458 and have more than one qualifying child
Easy Ways to Determine Whether You Qualify
There's a lot to know about qualifying for EITC, but the most important thing to know is that help is available. New this year on www.irs.gov/eitc, is the EITC Assistant. By answering questions online about yourself, your children, your living situation and your income, this tool is a convenient way for you to find out if you are likely to qualify for the EITC. You will see the results of your responses right away on your computer screen. This tool is also available in Spanish. Taxpayers, tax professionals, employers and community and public service organizations are encouraged to use the EITC Assistant.
The IRS also offers other resources to help you understand the EITC rules. IRS Publication 596, Earned Income Credit, contains eligibility criteria and instructions for claiming the tax credit. Copies of the publication are available in English and Spanish and can be found online at www.irs.gov or by calling 1-800-TAXFORM (1-800-829-3676). Finally, another option is to talk with your tax professional.
Tax Preparation Assistance
If you are a qualified taxpayer, you can receive free assistance in preparing your federal tax return. Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites, operated by trained volunteers, are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations.
In addition, you may qualify to have your tax return filed electronically for free. Electronic filing enables you to receive your refund faster. Eligibility requirements are available at www.irs.gov in the Free File section.
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