Ask The Money Coach

Posts Tagged ‘EITC’

One bright spot of tax season is the possibility of getting back a big income tax refund check from the government.

As an overall financial strategy, I don’t recommend that people rely on income refunds – because if you’re constantly getting one it means you’ve let the government take out too much taxes during the previous year.

But if you can snag a large tax refund check due to you reclaiming a tax credit, well then that’s a smart move.

And one of the biggest tax credits available is the Earned Income Tax Credit, or EITC.  Continue reading “How to Know If You’re Eligible for the Earned Income Tax Credit” »

Related Questions:

• can you get earned income tax credit for children not your own
• what is the maximun earned income tax credit a family of 5 can recieve?

By Lynnette Khalfani-Cox, The Money Coach

It’s time to get busy filling out those tax returns. Mercifully, you don’t have to pore over thousands of pages of the IRS tax code, nor do you have to pay an expensive accountant in order to get your taxes done by the April 15 deadline.

If you earned roughly $42,000 or less, or if you can’t prepare you own taxes, you can get help in filling out your tax return and even claiming the EITC from a Volunteer Income Tax Assistance (VITA) site in your area.

The VITA Program operates nationwide, and is staffed by individuals who are trained in completing basic tax returns. You can find a local VITA site by calling 800-829-1040. Most of the country’s 12,000-plus VITA sites are run out of community agencies, neighborhood centers, libraries and schools.

Here is what the IRS recommends you bring to a VITA site to have your tax returns prepared:

• ID: Proof of identification
• SS cards: Social Security Cards for you, your spouse and dependents and/or a Social Security Number verification letter issued by the Social Security Administration
• DOB: Birth dates for you, your spouse and dependents on the tax return
• Tax forms: Current year’s tax package if you received one
• W2: Wage and earning statement(s) Form W-2, W-2G, 1099-R, from all employers
• 1099: Interest and dividend statements from banks (Forms 1099)
• Last return: A copy of last year’s federal and state returns if available
• Bank info: Bank routing numbers and account numbers for Direct Deposit
• Daycare info: Total paid for daycare provider and the daycare provider’s tax identifying number (the provider’s Social Security Number or the provider’s business Employer Identification Number)

Related Questions:

• do i get my money back from a w2-g at the end of the year if im a dependent?
• does eitc go off of year to date or net pay
• EITC AGE 65
• how to claim eic when someone else is claiming child qs a dependant
• keep eitc chapter 13
• Money Coach program

By Lynnette Khalfani-Cox, The Money Coach

One special feature of the earned income tax credit is that you can get it sooner, rather than later. If you expect to qualify in 2009 for the earned income tax credit and you have at least one dependent child, you can request part of that credit right now under the “Advance EITC Program.”

Here’s how it works. You fill out a Form W-5, which is called the Earned Income Credit Advance Payment Certificate. (Get a Form W-5 from your employer, or download a copy from: http://www.irs.gov/pub/irs-pdf/fw5.pdf.) Soon after you complete the W-5, you will begin receiving advance EITC payments through your employer. The EITC payments are added to your regularly scheduled paychecks.  If you are self-employed, you cannot qualify for the advance payment.

In 2009, the maximum advance EITC payment amount you can receive through your employer is $1,826. Once tax season rolls around next year, you can still claim the earned income tax credit and receive the balance of any money that may be due you, above and beyond the $1,826 that was added to your pay over the course of this tax year.

To be eligible for the advance earned income credit payment, all four of the following must be true:

• You (and your spouse, if filing a joint return) have a valid Social Security Number
• You expect to have at least one qualifying child, and to be able to claim the earned income credit using that child
• You expect that your 2009 earned income and adjusted gross income will be less than $35,463 (or $38,583 if married filing jointly), with one qualifying child. Or you expect to have two or more qualifying children, and you expect your 2009 income will be less than $40,295 (or $43,415 if married filing jointly).
• You expect to be able to claim the EIC for 2009

The W-5 form is very short, easy to fill out, and will likely take you just one minute to complete.

On the W-5, you simply print or type your full name and social security number. Then you answer “Yes” or “No” to two questions, and check a box indicating your tax filing status (i.e. single, head of household, qualifying widow(er), or married filing jointly). At the bottom of the form, you sign and date the W-5, and that’s it.

Related Questions:

• i need extra money now
• income tax money now
• advance earned income credit loan
• I need tax money now
• need tax return money now
• how to receive advance earned income before tax season
• need extra money now
• money advance on income taxes
• need income tax money now
• need tax moneynow
• tax claim advance
• tax monies advance

By Lynnette Khalfani-Cox, The Money Coach

Although you can receive an Earned Income Tax Credit even if you have no children, the largest EITC refunds go to those with at least one ‘qualifying child’ on their returns.

If you want to claim someone on your taxes as a ‘qualifying child’ in order to get the EITC, you must meet federal guidelines. The IRS establishes three tests to determine whether your child is a so-called ‘qualifying child.’ The three tests examine relationship, age and residency.

According to the IRS, to be considered your ‘qualifying child’ for the EITC, a child must be your:

• son, daughter, stepchild, adopted child, eligible foster child, or a descendant of any of them, such as your grandchild; or
• brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (such as your nephew or niece)

Relationship, Age and Residency

What this means, thankfully, is that the EITC doesn’t just help parents. Grandparents, aunts, uncles, and even siblings can get this refundable tax credit, as long as they can claim a ‘qualifying child’ that they lived with for more than half of the year.

Regarding the IRS’s age requirements, you can claim someone as a ‘qualifying child’ for the EITC provided the individual was 18 years of age or younger at the end of the tax year. You can also claim young adults up to and including age 23 if they were a full-time student for at least one semester. Lastly, you can claim someone of any age as a ‘qualifying child’ if that individual is totally disabled.

Related Questions:

• qualifying child taxes young adults
• what disqualifies a child from earned income credit