Federal Earned Income Credit
AN OVERVIEW
TaxCreditResources.org is a web site that provides detailed
information about Federal and some state tax credits including the Federal Earned
Income Credit (EIC). The Federal Earned Income Credit is one of the U.S. government's
most important work promotion and anti-poverty programs. This web site explains
everything you need to know about the Federal Earned Income Credit program including
how to claim the EIC on your Federal tax return, where to find the correct tax
return forms and answers to commonly asked questions.
The Federal Earned Income Credit (EIC), also known as the earned income tax
credit (EITC), is a significant work incentive program developed by the Federal
government to combat poverty and to keep money in the hands of those who need
it most, i.e., families who earn low to moderate wages. For those who qualify
for the Federal Earned Income Credit, this program can lower or entirely eliminate
owed taxes. The Federal Earned Income Credit also entitles those whose credit
is larger than owed taxes to a cash refund from the IRS after filing the necessary
tax return forms. The Federal Earned Income Credit program provides low-income
workers additional money beyond income from their employer to encourage working.
Click the underlined links below for more information about each topic:
For some workers a similar program to the Federal Earned Income Credit is
also available on a state level. Approximately 15 states and the District of
Columbia offer a state-level version of the Federal Earned Income Credit program.
Workers who qualify for and receive the Federal Earned Income Credit may be
able to claim an additional state EIC tax credit on their state income tax return.
Claiming Federal Earned Income Credit will not interfere with eligibility
to apply and obtain benefits such as TANF, Medicaid, SSI, food stamps or subsidized
housing assistance, providing that those who receive money for the credit spend
the total amount received. Immigrants who are legally authorized to work in
the United States can also qualify for the Federal Earned Income Credit.
If you have any questions as to whether you qualify for the Federal Earned
Income Credit, please complete our Eligibility Check.
Payment options for the Federal Earned Income Credit
Should you qualify for Federal Earned Income Credit, you can receive an advance
on your refund. The refund payment does not come as a lump sum, however it comes
spread throughout the year in each paycheck you receive.
If you want to claim or apply for the Federal Earned Income Credit, you must
file a tax return with the IRS (usually by April 15th). To file a tax return,
you must complete one of three forms: Form 1040EZ, Form 1040A, or Form 1040
and submit it to the IRS. Workers with one or more qualifying children must
also complete the Schedule EIC form. These forms are available for free from
several locations, including the IRS web site. You may also be able to pick
up these forms at your local library or post office. If you need assistance
in filing your tax return or claiming the Federal Earned Income Credit, help
is available for free from several locations.
The Federal Earned Income Credit you receive may cancel taxes you owe, and
should the amout exceed any money you owe, you may be entitled to a refund from
the U.S. Treasury Department.
There are Volunteer Income Tax Assistance (VITA) sites where you can go to
get free help to complete your tax forms and with claiming Federal Earned Income
Credit. These VITA sites are open during tax season (January-April).
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