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.
References in periodicals archive ?
The cliff effect associated with the Earned Income Tax Credit is not, however, intended to measure income but to serve as a proxy for a taxpayer's level of assets: in 1995, Leslie Samuels, then-Assistant Secretary of Tax Policy for the Department of Treasury, testified to the House Ways and Means Committee that the cap on investment income comes from a belief that "it is inappropriate to provide the Earned Income Tax Credit to taxpayers with assets which can generate $1000 of investment income." (50) A taxpayer earning investment income is assumed to have assets that far exceed the value of the income generated from those assets.
(Unemployment payments don't count as income for this credit.) More information about the tax credit is available on the IRS web site www.irs.gov (type "earned income tax credit" into the search box at the top of the IRS home page).
If the friend files a return claiming her child as a QC, the child tax credit and earned income tax credit may exceed any tax benefit of applying their dependency exemptions to a higher marginal tax rate of the taxpayer.
Tens of thousands of people with disabilities are losing money each year because they are either unaware or do not know how to file for an Earned Income Tax Credit (EITC)--an anti-poverty program for hard working, low-income employees aimed at offsetting the burden of taxes, supplementing low wages, and providing an incentive to work.
Categories: Tax Policy and Administration, Advance payments, Cost effectiveness analysis, Data integrity, Eligibility determinations, Income taxes, Noncompliance, Program evaluation, Reporting requirements, Social security number, Tax administration, Tax credit, Tax law, Tax return audits, Tax returns, Earned Income Tax Credit
The Earned Income Tax Credit promised to be a great boon for the working poor, the very people who most deserved a helping hand.
"An interesting learning for us has been that the $11.50 level has not changed for two years," said Geary, "since the federal government has reduced tax rates slightly even for low-income families and has increased the Earned Income Tax Credit and child-care credit for some circumstances.
This information will provide members the opportunity to determine their eligibility for the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).
With welfare reform, some delivery of assistance to poor families was through the tax system in the form of an Earned Income Tax Credit. However, the EITC is incredibly complex.
For example, increasing the Earned Income Tax Credit would supplement minimum-wage incomes through the tax system without threatening jobs.
Her areas of responsibility included the estate tax, the earned income tax credit, and taxpayer compliance.