With the 2008 tax season underway, the Internal Revenue Service Monday encouraged taxpayers to look into whether they qualify for the Earned Income Tax Credit (EITC).
"Don't overlook this important benefit program that's been in existence for more than thirty years," said Clay Sanford, an IRS spokesman in Dallas. "Eligible taxpayers should take the credit they deserve."
The EITC provided $4.8 billion to nearly 2.2 million Texas residents last year. The IRS believes up to one in four eligible taxpayers fail to claim the credit, which can be as much as $4,716.
The EITC, sometimes called the Earned Income Credit (EIC), is a refundable federal income tax credit for low-income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.
To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return.*
A special "EITC Assistant" is available on IRS.gov or see Publication 596 <http://www.irs.gov/publications/p596/index.html> , Earned Income Tax Credit, for more information. Publication 596 is available for download at IRS.gov, or you may request a copy by calling 1-800-829-3676.
EITC Thresholds*
Current Tax Year, 2007
Earned income and adjusted gross income (AGI) must each be less than:
- $37,783 ($39,783 married filing jointly) with two or more qualifying children;
- $33,241 ($35,241 married filing jointly) with one qualifying child;
- $12,590 ($14,590 married filing jointly) with no qualifying children.
Tax Year 2007 maximum credit:
- $4,716 with two or more qualifying children;
- $2,853 with one qualifying child;
- $428 with no qualifying children.
Investment income must be $2,900 or less for the year.
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