The federal government has a plan for putting extra money into the pockets of workers. It is called the Earned Income Credit (EIC) and it can provide up to $4,140 in added income to qualified workers. Below are important details about this valuable tax break.
Families with two or more qualifying children and an adjusted gross income of up to $33,178, or $34,178 if married filing jointly, may be eligible for up to $4,140. This maximum amount is paid to those with incomes between $10,350 and $13,550, or $14,550 if filing jointly.
Families with only one qualifying child and an adjusted gross income of up to $29,201, or $30,201 if married filing jointly, may be eligible for up to $2,506. This maximum amount is paid to those with incomes between $7,350 and $13,550, or $14,550 if filing jointly.
Workers between the ages of 25 and 64 with no qualifying children but with an adjusted gross income of up to $11,060, or $12,060 if married filing jointly, may be eligible for up to $376. This maximum amount is paid to those with incomes between $4,900 and $6,150, or $7,150 if filing jointly.
Listed below are the requirements for the EIC:
· You must have earned income derived from wages, salaries, tips, or self-employment. · You must fie a 2002 income tax return to receive the credit, but the IRS, as well as local community VITA volunteers and paid tax preparers, can help figure the credit for you. · You cannot file your income tax return in the status of married filing separately. · Your investment income cannot exceed $2,550 and you cannot file Form 2555 for foreign income. · You must be a U.S. citizen or resident alien for the entire year. · You and any qualifying children must have a valid Social Security Number.
Listed below are additional features about the EIC:
· A qualifying child may be your natural child, grandchild, stepchild, adopted child, foster child, or sibling if cared for as your child. · A qualifying child must be under age 19 or under age 24, if a full-time student, or any age if totally and permanently disabled. · A qualifying child does not have to be your dependent, but must have lived with you in the United States for more than half of 2002. · Among divorced parents, either parent, but only one parent, can claim a qualifying child. Several qualifying children of two parents may be divided between them by agreement. · In cases of joint custody when the parents cannot agree, the parent with whom the child lived the longest during the year, or if that is equal, the parent with the highest adjusted gross income can claim the child.
Filing for and receiving the earned income tax credit has no effect on certain welfare benefits, including food stamps, low-income housing, supplemental security income, and Medicaid. Temporary assistance to needy families (TANF) may be affected.
If you expect to be eligible for the EIC in 2003, you may file Form W-5 with your employer to receive EIC payments in advance. Ask your employer for the form. For additional information about the Earned Income Credit, call 1-800-829-4477 and request topic number 601 to hear a recording explaining EIC.
Call 1-800-829-3676 to request income tax forms and instructions, including publication 596, Earned Income Credit, and Schedule EIC. Call 1-800-829-1040 to ask the IRS questions regarding your tax return and filing for EIC or visit the Web site www.irs.gov.