Earned Income Tax Credit
Information: EITC, the Earned Income Tax Credit,is a refundable federal income tax credit for low to moderate income working individuals and families.It was originally approved in 1975 by Congress in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.
Eligibility: Individuals earning less than $45,060 (or $50,270 if married and filing jointly) with additional some restrictions.
Maximum Credit: The maximum credit for tax year 2012 is $5,891.
Taxable earned income includes: Wages, salaries, tips, and other taxable employee pay; Union strike benefits; Long-term disability benefits received prior to minimum retirement age; Net earnings from self-employment if: You own or operate a business or a farm or You are a minister or member of a religious order; You are a statutory employee and have income.
Examples of Income that are Not Earned Income: Pay received for work while an inmate in a penal institution; Interest and dividends; Retirement income; Social security; Unemployment benefits; Alimony or Child support.
Special Note: Even if you don’t owe any tax or are not required to file, you must file a tax return in order to claim the credit.