Find us someone who likes to pay taxes and we’ll show you someone who, well, let’s face it, nobody likes to pay taxes. Of course, if you were to tell someone that the IRS is going to cut them a check, they’ll look at you cross eyed and say that you’re full of it.
But that’s just what’s going to happen with the Earned Income Tax Credit, one of the few tax breaks that can actually get you a refund check from the feds even if you have no tax liability at all. For the last year in which IRS data is available, over 27 million taxpayers actually received the Earned Income Tax Credit and, with that in mind, we thought we’d give you a bit more information on what you need to do qualify. Pay attention because those of you trying to survive on minimum wage can utilize this advice. Enjoy.
First and foremost, you have to file a tax return in order to claim your Earned Income Tax Credit. On all of the primary return forms, including the full 1040, 1040 A and the compact 1040 EZ, there are spaces available to claim the credit.
As far as the size of your household, it doesn’t matter if you have children or not. Of course those families with children will get substantially more but still, even if you don’t have children, you can still get the Earned Income Tax Credit.
The fact is, for many taxpayers the Earned Income Tax Credit is a very big benefit. In 2012, for example, over $63 billion was given to taxpayers in total according to the IRS and, depending on the size of your family, in any given year you may qualify to get up to $6000 or more in EITC payments.
Low income tax payers also get the benefit of the earned Income Tax Credit because, basically, it’s a tool to fight poverty. In fact, it was instrumental in helping over 6 million people to rise above the poverty line according to the most recent IRS figures, more than half of them children. The EITC is actually the second largest assistance program in the country aimed at low income households according to the Tax Policy Center, second only to the Supplemental Nutrition Assistance Program or SNAP.
As of right now, approximately half of all states have their own state version of the EITC, usually taking a percentage of the Federal credit and using it to offset any state tax liability they may have. The majority allow recipients that have no state tax liability to get an EITC refund. If you’re looking for a map of all of the states that have provisions for the EITC, the Center on Budget and Policy Priorities has one on their website.
The Earned Income Tax Credit isn’t universally loved, by any means, mostly due to the confusion about many of its complicated rules for eligibility as well as how to calculate the amount of credit an individual will receive.
On the other hand, it’s proving quite effective at providing low income workers with the funds they need to supplement their earnings and will surely pay a role in the federal government’s fight against poverty into the future. If you’re eligible to receive the EITC, you definitely should take full advantage of it.