Tax Credit Requirements Earned Income

by ofnews on 2010/11/28

in ,Financial Services,economy

The earned income credit is an important tax credit that is a work incentive program that is run by the federal government. This credit is aimed at low income families that can reduce their tax bill and in most cases provide a refund. In as little as 15-20 minutes you can determine if you qualify for the earned income credit.

To find out if you qualify for the earned income credit you must meet certain guidelines:

  • You must be married and filing jointly, head of household, qualifying widow, or filing single.
  • You must have taxable income or earnings from self-employment.
  • You, your spouse, and qualifying children must be US citizens.
  • You, your spouse and qualifying children must have valid social security numbers.
  • You and your spouse must be at least 25 but not older than 65 at the end of the tax year.
  • You must not be claimed as a dependent on anyone else’s return.
  • If you do not have any qualifying children your income must be below $12,800.00
  • If you have one child your income must be below $33,995.00
  • If you have two children then your income must be below $33,995.00
  • You must reside in the United States for at least half of the tax year.
  • You cannot claim this credit if you file using Forms 2555 or 2555-EZ.

If you attempted to claim this credit last year and you were denied then you may want to try again if your income levels have changed or your family size has changed.

 

To learn more about the earned income credit guideline, visit TurboTax Online. TurboTax online offers up to date information on the requirements and how to claim the credit.

Because the child tax credit amount, is not a deduction, you get to take those dollars right off your tax bill. That makes this much better than a deduction would be, which would just reduce the income you use to determine taxes.

And the child tax credit amount does not affect the exemptions you take for dependents. The credit is in addition to your exemptions.

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