Tax law, like any established field of knowledge, is full of acronyms and abbreviations. Some of them can seem pretty arcane to people who aren’t tax professionals. But doesn’t mean they aren’t important.
One such abbreviation is EITC. This stands for the Earned Income Tax Credit. The IRS itself, on its own website, describes EITC as a way to help taxpayers of modest means keep more of what they made.
For taxpayers in California and across the country, the EITC can be especially important to people of moderate means who have children. It can provide a refundable federal income tax credit for those who qualify.
It’s a tax credit that has been part of the federal tax code since the mid-1970s. If the EITC exceeds the amount of taxes you owe, you are eligible for a tax refund. But in order to get it, you must not only meet the qualifications. You must also file a tax return, even if you don’t owe any taxes. And you must claim the credit.
To find out whether you qualify, it is worth reviewing the rules with a tax professional. Those rules can get pretty detailed. For example, the qualifying rules for children involve such factors as tests for relationship, age and residency.
As important as the EITC is for many working families, it isn’t only for those families. A taxpayer can be without qualifying children and still be eligible for the EITC.
Much depends on income, of course. But for a taxpayer with income of less than $13,980, or $19,190 for a married couple filing jointly, the EITC can be worth up to $5,891.
Source: “EITC Home page-It’s easier than ever to find out if you qualify for EITC,” IRS.gov
Additional source: “A Guide to Tax Breaks for the Middle Class,” US News & World Report, Lisa-Greene-Lewis, 3-19-13
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