Here’s a Tax Cut for The Working Class!
Do You Qualify for Income Tax Credits?
Earned Income Credit is a special tax benefit for working people who earn low or moderate incomes. The purpose of the credit is to reduce the tax burden on these workers and, in effect, supplement wages.
This year the EIC is worth more than ever – over $5,657 for some families. Many families also may qualify for the Child Tax Credit, worth up to $1,000 for each child. Tax credits for educational and job training expenses are also available.
Workers who qualify for the EIC and file Wisconsin and/or federal tax returns can get back some or all of the taxes that were taken out of their pay during the year. They may also get extra cash back from the Internal Revenue Service (IRS).
Who can get the Federal EIC?
Single or married people who worked full-time or part-time at some point in 2009 can qualify for the EIC, depending on their income.
• Workers who were raising one child in their home and had income of less than $35,463 (single) or $40,463 (married filing jointly) in 2009 can get up to $3,043.
• Workers who were raising two children in their home and had income of less than $40,295 (single) or $45,295 (married filing jointly) in 2009 can get up to $5,028.
• New! Workers who were raising three or more children in their home and had income of less than $43,279 (or $48,279 for married workers) in 2009 can get an EIC of up to $5,657.
• Workers who were not raising children in their homes, but were between ages 25 and 64 on December 31, 2009 and had income below $13,440 (single) or $18,440 (married filing jointly) are also eligible to receive up to $457.
Qualifying Children
• “Qualifying children” include: sons, daughters, stepchildren, grandchildren and adopted children, as long as they lived with the taxpayer for more than half the year. Nieces, nephews, children of a friend or foster children can be “qualifying children” if they lived with the taxpayer all year and were cared for as members of the family.
• “Qualifying children” must be under age 19, or under 24 if they are full-time students. Totally and permanently disabled children of any age also are considered “qualifying children.” A valid Social Security number is required for all qualifying children.
How do you get the Federal EIC?
• Workers raising children in 2009 must file either form 1040 or 1040A and must fill out and attach Schedule EIC. Workers with children cannot get the EIC if they file form 1040EZ or fail to attach Schedule EIC. Married workers must file a joint return to get the EIC. Those who qualify for the credit without children can use Form 1040 EZ.
Workers who qualified but did not take advantage of the EIC during the last four years can still go back and claim those credits. By utilizing the Advance Earned Income Tax Credit, wage earners can add as much as $127 to their paychecks each month by filling out a Form W-5 and giving that to the employer.
Child care tax credits worth up to $1,000 per child as well as credits for school tuition and 401(k) contributions are also available.
Get Additional Wisconsin EIC
Wisconsin taxpayers are also eligible for similar Earned Income Credits when filing their Wisconsin tax returns. Families with income of less than $34,463 in 2009 can get a credit of up to $122 for one child. Families with incomes of less than $45,295 having two children can get a credit up to $704; and families with income of less than $48,279 and three or more children can get a credit up to $2,432.
Households with income in 2009 of less than $24,500 are also eligible for up to $1160 under the Homestead Tax Credit.
Getting Help
Helpful information on a variety of state and federal tax credits along with links to downloadable tax forms is available on the University of Wisconsin Extension’s Web site: www.uwex.edu/ces/econ/
Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) provide free tax preparation for people with limited incomes, disabilities, or limited English proficiency. The Internal Revenue Service trains the volunteers and they know about the credits listed above. Many VITA and TCE sites provide free electronic filing for fast refunds. For information about the site nearest you, call 1-800-906-9887.
For more information about how you can get the Earned Income Credit and free help filing your taxes, call the IRS at 1-800-829-1040 or visit www.irs.gov.