In 2010, nearly 27 million Americans claimed the Earned Income Tax Credit (EITC) for a total of $59.5 billion. Could you use some of that cash? Then take our quiz to find out if you qualify and how to claim your money.
The EITC is an anti-poverty measure built into the U.S. tax code to help lift working Americans above the poverty line.
Even though the EITC is a tax credit, it still fights poverty better than any other social welfare program in America.
The Internal Revenue Service (IRS) estimates that 6.6 million people were elevated above the poverty line because of the refunds they received through the EITC.
The EITC is targeted at working individuals and family with very little earned income, so $13,660 is the maximum you can earn as a childless individual and still receive a tax credit.
$49,078 is the absolute most you can earn and still receive the EITC, and the amount of your credit will be very low.
If you're married with one or more children, you will receive the largest EITC if your annual income hovers around $14,000. Higher or lower than that, and your EITC amount decreases.
It's right there in the name. The <i>Earned Income</i> Tax Credit is for people with some earned income, but not enough.
You don't have to be a U.S. citizen to qualify for the EITC. You can be a legal resident alien as long as you have a Social Security number.
If you're married, the IRS says you need to file your income taxes together to qualify for the EITC.
The three "tests" for qualifying children are age, relationship and residency. In this case, even though your son meets the age and relationship criteria, he doesn't live with you, so your ex-husband is the one who would include him in an EITC claim.
Since full-time students often live at home and depend financially on their parents, they are considered qualifying children until the age of 24.
The qualifying age range for claiming the EITC as a single person or married couple without qualifying children is 25 to 65 years old. There is no age limit for those claiming the credit with children.
Wages, salary, tips and all taxable benefits (including Social Security and unemployment) must be included in your earned income calculations.
If you have foreign earned income that requires you to file IRS form 2555, then you can't receive an EITC.
If your investment income exceeds $3,150, then the IRS doesn't think you're in desperate need of an anti-poverty tax credit.
The EITC emerged from welfare reform efforts in the early 1970s and was included as part of the Tax Reduction Act of 1975.
In the majority of cases, the Child Tax Credit is fully refundable.
One-fifth of qualified families fail to claim the credit, so the Internal Revenue Service and Congress are trying to get the word out about the EITC so that more eligible families can benefit from the credits.
This maximum credit of $5,751 is reserved for married couples with three or more children who earn around $14,000 a year.
Gulp. $13 billion is a lot of zeros for some simple math errors.