By George Wong, CPA
Have you heard about the Earned Income Tax Credit (EITC)? If not, you might possibly be missing out on free money from the Internal Revenue Service (IRS). According to the IRS, eligibility for the Earned Income Tax Credit (EITC) depends on the earned income, such as wages, salaries, tips, and net earnings from self-employment earnings, you have.
Also, the following rules must be met:
1) Have a valid Social Security Number
2) Have earned income from employment and/or self-employment
3) Cannot use the married filing separate filing status
4) Must be a U.S. citizen or resident alien all calendar year
5) Cannot be a qualifying child of another taxpayer
6) Cannot have foreign earned income
7) For 2011 year, must have earned income and adjusted gross income each of less than:
a) $43,998 ($49,078 married filing jointly) with three or more qualifying children
b) $40,964 ($46,044 married filing jointly) with two qualifying children
c) $36,052 ($41,132 married filing jointly) with one qualifying child
d) $13,660 ($18,740 married filing jointly) with no qualifying children
8) Must have investment income (i.e. interest, dividends, net capital gains) of $3,150 or less for the year.
If you have a dependent, the dependent must also meet the following tests to be a qualifying child for EITC:
1) Relationship test: dependent must be related to you by lineal descent
2) Age test: dependent at the end of the year was:
a) Younger than age 19 or younger than age 24 and a full-time student
b) Any age if permanently and totally disabled
3) Residency test: dependent must live with you in the U.S for more than half of the year
4) Joint Return test: dependent must not have filed a joint return for the year, unless the dependent and the dependent’s spouse did not have a filing requirement and filed only to claim a refund
5) In addition, the qualifying child cannot be used by more than one taxpayer.
Please contact George Wong at Bell & Company, PA. If you have any questions regarding the EITC, email firstname.lastname@example.org or call 501.753.9700