Earned Income Credit Information

What is Earned Income Credit?

Earned income credit is a tax credit that puts a little money back into the pockets of taxpayers who have moderate to low income. The earned income credit tax form is not a separate form like a Schedule C for self employed taxpayers. There is however, an assistant at the web site of the IRS that you can use to see if you qualify. Better yet, you can use online tax software, such as, TurboTax Online to see if you are eligible for the earned income credit.

Who is Eligible for the Earned Income Credit?

The criteria for earned income credit qualification has a few considerations. The first thing you must do is determine whether or not you qualify.

You must be a United States citizen. You do have to make an income whether it is as an employee or self employed. You must have a valid Social Security number for you and your children. You don’t actually have to be parents to qualify for the earned income credit. If you happen to have investment income, it must be less than $3,100 for the year. Of course there are always the tricky areas of tax laws that can become quite complicated.

For example, the age limit of children. Your children have to under 18 years of age, unless they are full time students. Full time students must be under 24 years of age and if you child is permanently disabled then, the age limit doesn’t apply. Do you see what I mean about all of the rules with exceptions?

Advice for Claiming the Earned Income Credit

The best advice I can give you concerning the earned income credit is to use an online tax preaparation software company, such as, TurboTax Online. The tax software will scan all of your personal data and go to work for you looking for every tax credit and tax deduction you are qualified to claim.

Some EIC Qualifications for Income Levels

Your income for married filing jointly must be $45,250 or less with two children. If you are filing single then your income must be $35,450 or less with two children. All of these EIC calculations change based on filing status, income levels, and how many children you have or if you don’t have children.

You, your spouse, and any qualifying children must have valid social security numbers and must not be claimed on anyone else’s return.

If you meet all of the guidelines then it could result in a credit of up to $5,666.00. So this credit is definitely worth exploring to see if you qualify. As your income amount increases your credit amount will begin to phase out.

What about my benefits?

If you currently receive any type of public assistance such as Medicaid, food stamps, or live in low-income housing, this credit will not affect your benefits in any way.

How do I estimate the amount of my credit?

If you find that you meet all the necessary guidelines then you will need to use the table provided on the instructions for Forms 1040A or 1040EZ. This table will help you estimate the amount you will receive from the earned income credit.

Visit TurboTax Online to estimate the amount of your earned income credit.TurboTax online offers free tools and calculators to help you file your return. The earned income credit tax form can be calculated through your 1040 tax return data entries.

2011 Tax Filers

Well let’s start at the beginning. Do you even have to file a tax return? If you have a refund coming your way, you must file an income tax return to get the money. The most taxpayers use the federal 1040 tax form. There are several varieties of the 1040 tax form. You have to decide which one suits your needs best.  Here are some of the reasons why you would want to file if you were eligible for any of these items:

• Additional child tax credit
• Earned income credit
• First time home purchase credit
• Health coverage tax credit
• Recovery rebate credit

The reasons listed above are just some of the reasons why you would want to file a 1040 federal income tax form. There are exceptions for children under the age of nineteen and also for full time students. Under certain situations the parent or parents can include the dependent child’s income onto their tax return. You will want Form 8814 if you choose this option.

Resident Alien, Non-Resident Alien or Dual-Status Alien

Things can get a bit tricky is you are a resident alien, non-resident alien or dual-status alien. In most cases non-resident aliens and dual-status aliens need to use different forms. You may need to use the 1040NR or the 1040NR EZ. For more detailed information on that you may want to take a look at Publication 519. This publication will help you to understand the requirements needed for you to comply with the United States tax laws.

April 15^th

Okay now, we all know April 15^th is the due date for filing your tax return. But what if I didn’t get it done in time you may ask? You can file for an extension using Form 4868. You must file this form by the original due date. Do not get filing your tax form and paying any taxes owed confused in your mind. They are two very separate issues. If you owe, you must pay on time. The extension will give you six months to send in the paperwork but, if you owe, you must pay on time or else you will incur penalties and interest on what monies you owe.

1040 ez or 1040 Form?

Let’s say you qualify to use the 1040ez income tax form and you think it just might be the easiest way to go. What you may not know is that the 1040 form may have better benefits for you. For example, you may be able to claim head of household filing status which usually gives you a lower tax than filing single.

Here’s another thought on which form to use. If you happen to itemize deductions then, you can only use form 1040 and will be unable to use form 1040 ez. What you will have to do is look at the standard deduction for your life situation and compare that to all of your deductions to see which one will be bigger.

Help!

What I would advise you to do is to give yourself a break and let the tax experts handle the tax area. TurboTax Online is fast, easy, secure, guarantees the biggest refund possible and they will do all of the hard work for you! They are always up to date with the latest tax laws. You can even try for free. You do not pay unless you choose to file. Get started now!