Earned Income Tax Credit

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Earned Income Tax Credit

Also called the EITC. A dollar-for-dollar reduction in the tax liability for lower and middle income persons in the United States. The credit is applied against taxes owed on wages, salaries, tips and other forms of earned income. Investment income is excluded and one may not have more than a certain amount of investment income to be eligible for the credit. Households with children may receive larger credits. The EITC is refundable, meaning if the credit causes one's tax liability to go below zero, one receives the difference from the IRS.
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Although a few tax situations may exceed the scope of the aid provided by VITA, the volunteers can assist with most typical tax situations, including those involving wages and earnings from self-employment, interest and unemployment income, Social Security benefits, dividends and returns that involve child tax, education or earned income credits.
This fact is the result of gender income gaps, part-time employment and inadequate work grants (earned income credits).
Last year, the VITA campaign and Louisville AARP sites processed more than 14,000 returns, adding more than $19.7 million to the local economy, including nearly $6 million in Earned Income Credits to residents.
* Due to fraud, another permanent provision included in the new law enforces that earned income credits or child tax credits cannot be filed for in amended returns, claiming those credits for any year that the taxpayer did not have a valid social security number or ITIN.
"Providing access to free online tax services that assure lower-income members receive earned income credits and other state and federal tax credits is of tremendous value," Moody said.
Some typical items for which the IRS requests verification include alimony, moving expenses, various itemized deductions, casualty losses, employee expenses, Schedule C receipts and expenses, foreign tax credits, earned income credits and education credits.
A $1,000 child tax credit is extended, and roles expanding earned income credits for larger families and married couples are added.
The preparer then changed the auditor's filing status from single to head of household, increased the dependency exemptions claimed, and qualified the auditor for both the child tax and earned income credits. This increased the refund from $100 to $6,000.
The bill protects, in bankruptcy cases, earned income credits given to lower-income working families by federal tax law.
The January change was boosted by cost-of-living adjustments to several Federal transfer payment programs, by increased Earned Income Credits, and by pay raises for Federal civilian and military personnel.
* Inform workers about state earned income credits. Currently, workers in Minnesota, New York, Vermont, and Wisconsin can get a refundable state EITC in addition to their federal EITC.
Exhibit I on page 319 compares the current effect on taxes and earned income credits to the future loss of social security benefits when $100 is sheltered in a medical care FSA.