If you are looking for For an easy way to lower your federal income taxes and perhaps get a tax refund check for thousands of dollars, a sure-fire tax measure is to claim the Earned Income Tax Credit. The Earned Income Tax Credit, alternatively referred to as EITC or EIC, is a refundable tax credit granted to low to moderate income individuals and couples who are working and who meet certain other criteria.
In 2013, the average taxpayer who claimed the earned income credit received a tax credit of $ 2,355.
Here’s how to get your tax credit and refund with EIC help in 2014.
The definition of “earned” income
The first criteria to be eligible for the EITC is that you must have had “earned” income, which means that you had a job and that you were receiving employee wages (such as wages or tips), or that you owned a business or farm and received self-employment income. .
Taxable income you can Having received union strike pay and certain disability awards may also qualify you as having “earned” income in order to receive the EITC.
But you’re out of luck (sorry!) not eligible for the earned income credit if your alone form of income comes from one or more of the following sources:
Remuneration of the inmate (i.e. money for work during incarceration)
Even if you personally are not eligible for the EITC, if you have a spouse with “earned” income and you file a joint tax return, your spouse may be eligible for the EITC.
Be aware, however, that if you are married and file a separate tax return, neither of you qualify for the earned income credit as per IRS guidelines.
2013 Income requirements for the EITC
The next most important thing to know about the EITC is that your income must fall below a certain level in order to get this lucrative tax credit. Income guidelines (ie income limits) are updated annually.
To claim the earned income credit for the 2013 tax year, your adjusted gross income (RGA) must have been less than:
$ 46,227 ($ 51,567 in marriage) if you have three or more eligible children
$ 43,038 ($ 48,378 for married couples) with two eligible children
$ 37,870 ($ 43,210 for married couples) with one eligible child
$ 14,340 ($ 19,680 of joint deposit) without eligible children
So now let’s get to the good part. How much of a tax credit (and possible tax refund) can you receive?
According to IRS publication 596, here is the maximum income tax credit you can get for the 2013 tax year, based on the number of children you have:
$ 6,044 with three or more eligible children
$ 5,372 with two eligible children
$ 3,250 with an eligible child
$ 487 without eligible children
As you can see, the earned income credit can put thousands of dollars back in your pocket if you have kids. But even those who don’t have children can still get almost $ 500 of this credit.
And if you do some family planning and plan to have a child in 2014, by 2015 you can get an even bigger tax credit. This is because just as the income guidelines are adjusted upward each year, so too is the maximum annual credit you can claim for the EITC. So, next year, your repayment potential with the EIC is even greater.
Other eligibility criteria for the EITC
The IRS guidelines include a few other EITC eligibility criteria: one of them is that your investment income, if any, for 2013 must be $ 3,300 or less for the year. . For most people who earn around $ 50,000 or less, this won’t be a problem. But it is still an important condition to know.
To claim earned income Tax credit, you have to file an income tax return even if you don’t owe money or even if you are not required to file. You or your tax preparer must complete Schedule EIC, the Eligible Child Earned Income Credit Information Form, and submit that Schedule EIC with your 1040. (If you are filing a 1040A, you can simply use a EIC spreadsheet and keep it.)
Also, keep in mind that it is not necessary to have a child to apply for the EIA. But the biggest IEC reimbursement checks are provided to those with children.
Lynnette Khalfani-Cox is a personal finance expert and co-founder of the free financial advice site, AskTheMoneyCoach.com. Follow Lynnette on Twitter @themoneycoach and Google plus.