Maximizing Your Tax Refund With The EITC

The Earned Income Tax Credit, EITC or EIC, is a benefit afforded to working people with low to moderate income. In-order to qualify for this credit, a tax payer must meet certain requirements and file a tax return.  A tax payer is encouraged to file a tax return even if they do not owe any taxes or are not required to file a return. By doing so the EITC reduces the amount of tax you owe and may even give the tax payer a refund.

To qualify for EITC the individual tax payer must have earned income from working for someone or from running or owing a business and meet some basic rules. If the tax payer does not have a qualifying child additional rules must be met.

Qualifying for EITC:

For a tax payer to qualify for the earned income tax credit:

1.    you must have earned income and adjusted gross income within certain limits; AND

2.    you must meet certain basic rules and

3.    either meet the rules for tax payer without a qualifying child

4.    or have a child that meets all the qualifying child rules

EITC Basic Rules:

Social Security Number

A social security number is required for all persons listed on a tax return, this includes, the tax payer, the tax payer’s spouse and any qualifying child listed on the tax return. Such social security number must be valid for employment and must have been issued before the due date of your return (including extensions).

Filing Status

The tax payer must file as either:

• Married filing jointly
• Head of household
• Qualifying widow or widower
• Single

It is important to note that a tax payer cannot claim EITC if their filing status is married filing separately.

Income Earned During 2017 and AGI Limits

For income tax year 2017, if the tax payer filing status is single, head of house hold or widowed, the tax payer’s earned income and adjusted gross income (AGI) cannot be more than:

A)  $15,010.00 If the tax payer has no qualifying child.

B)  $39,617.00 If the tax payer has one qualifying child.

C)  $45,007.00 If the tax payer has two qualifying children.

D)  $48,340.00 If the tax payer has three or more qualifying children.

For income tax year 2017, if the tax payer filing status is married filing a joint return, the tax payer and spouse earned income and adjusted gross income (AGI) cannot be more than:

·        $20,600.00 If the tax payer has no qualifying child.

·        $45,207.00 If the tax payer has one qualifying child.

·        $50,597.00 If the tax payer has two qualifying children.

·        $53,930.00 If the tax payer has three or more qualifying children.

Also of importance to the tax payer is the fact that for 2017, any income from investment is limited to $3,450.

Maximum Credit Amounts

The maximum amount of earned income tax credit a tax payer can claim for Tax Year 2017 is:

• $6,318 with three or more qualifying children
• $5,616 with two qualifying children
• $3,400 with one qualifying child
• $510 with no qualifying children

To claim the earned income tax credit a tax payer must file a Federal tax return and claim the credit. If you have a qualifying child, you must file the Schedule EIC listing the children with either the Form 1040A or the Form 1040. If you do not have a qualifying child, you can use the Forms 1040EZ or the 1040A or 1040.

For all your accounting and tax needs, the office of Metro Accounting And Tax Services, CPA is ready to provide the tax payer with professional guidance.

User | 24/01/2018