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Earned Income Tax Credits & Week in Review

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Dear Debi,
What is the Earned Income Tax Credit and how do I qualify for it?
Debi's Tips
Debi Gutierrez
Debi Gutierrez
Host
  • The Earned Income Tax Credit (EITC) reduces the amount of taxes you owe you may get money back!
  • The benefit is based on a sliding scale with a maximum benefit of $4,400 in tax year 2005
  • The VITA program offers free tax help to low- to moderate-income people who cannot prepare their own tax returns
WEEK IN REVIEW
Dont forget about the great things that we learned this week:
Expert Advice
Victor Omelczenko
Victor Omelczenko
IRS spokesman
The Earned Income Tax Credit, also known as EITC, has been widely praised for its success in supporting work and reducing poverty. This credit system has had a large impact in inducing more single mothers to work and encouraging work among welfare recipients. It is a system designed to help lift people out of poverty. The credit is capped at $4,204 for a family with 2 children and $2,547 for a family with one child.

In order to qualify for the EITC, you have to prove that you have earned some money during the tax year and you and your children must have social security numbers. Also, if you are married, you must file jointly. Usually the credit is for people with children, but singles can also qualify. You could be self-employed (as long as you have proof of income) or employed through someone else (W-2 form).

If you have earned below a certain amount of money, you are not required to file taxes. However, it may be to your advantage to file taxes so you can benefit from the EITC. For example, a family that has made $15,000 last year would not be required to file or pay taxes. However, if they did file and used the EITC, they actually would be getting money back. Its a great program designed to help families. The maximum benefit is $4,400 and is on a sliding scale from there down.

To help people apply for the EITC, there are volunteer income tax assistant sites throughout the country that the IRS has set up during the tax filing season. Theyre typically operated out of community centers, churches, etc. This program is called the Volunteer Income Tax Assistance Program (VITA). Volunteers are trained by the IRS.

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