Don't Overlook the Earned Income Tax Credit (EITC)
Posted on 02/20/2012
More workers could be eligible for a special tax credit this year and not know it. As a result, they may overlook claiming the Earned Income Tax Credit, or EITC, which can put up to $5,751 into their pockets.
People move into and out of EITC eligibility based on changes in their earnings, their parental status or their marital status according to Maceo Kirkland, Attorney with the Legal Services Alabama Low Income Taxpayer Clinic. "Many people will qualify for the first time this year due to economic changes in their incomes."
Anyone earning $49,078 or less from wages, self-employment or farming in 2011 should see if they qualify. Eligible workers must file federal income tax returns – even if they are not required to file – and specifically must claim the credit to get it.
“IRS estimates four out of five eligible workers claim their EITC. We want to raise that to five out of five,” Kirkland said. “They earned it. Now they need to file, claim it and get it.”
Taxpayers have several choices for free help determining their EITC eligibility and claiming the credit. Many communities have volunteer income tax assistance sites. To locate a site, call your community's 211 or 311 number for local services or call the IRS at 1-800-906-9887. Help also is available at IRS Taxpayer Assistance Centers. Locations are online at www.irs.gov.
To help accurately determine their EITC eligibility and prepare their returns, individuals should bring:
- Photo proof of identification
- Social Security cards for themselves, their spouse and dependents or Social Security number verification letters issued by the Social Security Administration
- Birth dates for all persons listed on the tax return
- Wage and earning statement(s) Forms W-2, W-2G, and 1099-R, from all employers
- Interest and dividend statements from banks (Forms 1099)
- Copies of last year's federal and state returns, if available
- Bank routing and account numbers for direct deposit of their refunds
- Other relevant information about income and expenses
- Amounts paid for day care, if applicable and the day care provider's identifying number.
Both spouses must be present to sign joint returns. Anyone paid to prepare federal income tax returns is required by law to sign the return and enter their Preparer Tax Identification Number.
“EITC is a financial boost for working people hit by hard economic times. This is money that can make their lives a little easier, especially families with three or more children who get an extra boost with a larger credit this year,” Kirkland said. Last year there were 527,903 EITC claims filed in Alabama with the average EITC of $2,558.
Legal Services Alabama is a non-profit organization providing free civil legal assistance to low-income individuals. Individuals may apply for services online at www.AlabamaLegalHelp.org or call toll-free 866-456-4995.