What is an Earned Income Tax Credit?
There are many taxpayers who file their own taxes. Yet, they may have no idea how to answer some of the questions asked, no matter how user-friendly a tax software may be. Most of the confusion may come from simply not knowing or understanding the general terms.
One important one is Earned Income Tax Credit (EITC or EIC). Because some may not know what it means, they often will answer ‘no’ on their taxes just to be on the safe side. Actually, qualifying for EIC is not a bad thing. In fact, it may help you receive more money on your annual taxes.
According to the Internal Revenue Service (IRS), an EIC is a credit for taxpayers whose annual income ranges from low to moderate. It is designed to give those who don’t make a lot of money a tax break.
Who Can Qualify?
You or your spouse might be able to qualify only if you file jointly. If you and your spouse file married filing separately, this will forfeit you from being able to claim EIC. Additionally, you and your spouse must have a valid social security number. Of course, you must be a United States citizen and no one can claim you as a dependent. Furthermore, you must meet at least one of the following criteria:
- EIC qualifiers must have a qualifying dependent.
- EIC qualifiers have to be between the ages of 25-65 at the end of that respected tax year.
- EIC qualifiers must have lived in the United States for more than half of the year .
Why is There an Age Limit?
The ages 25 and 65 are significant because for the IRS, it marks the beginning and ending of financial independence. The age 25 marks the age limit where a parent can no longer claim a child and 65 marks the average age most taxpayers retire and begin collecting their social security. It makes all the difference determining whether someone can officially claim you as an independent verses you claiming him or her! Of course, certain stipulations apply for every case, depending on each household’s situation.
So This Only Applies to People with Children?
Not necessarily. Tax filers who don’t have any children might be able to qualify for EIC, although it is rare. If you don’t have any children or dependents and feel that you might still qualify for EIC, contact your tax consultant to find out if you are eligible.
Then Who Technically Qualifies as a Legal Dependent?
Three important facts must apply to determine whether someone qualifies as a legal dependent:
- Age – A qualifying child must be at least 19 years old and 24 if they are in college.
- Relationship – There are many ways your qualifying dependent can be related to you.
- Legally adopted or foster child
- Sibling through marriage and/or their descendants (niece and nephew)
- Citizenship – Qualifying dependents must be a legalized citizen of the United States.
We Can Tell You What You Need to Know!
If you want to learn more about other tax terms that might give you a tax refund or increase your existing one, contact Success Tax Relief. Our company has over 30 years of experience working with tax attorneys, tax preparers, and consultants. Call us at 877-825-1179 or contact us online to schedule an appointment now!