What is Earned Income Credit (EIC)?
Taxpayers are always very interested in the various tax credits that they can use to reduce their overall tax payments. The Earned Income Credit, commonly referred to as the EIC, is a tax credit which was established in an effort to help people who earn a low income to live as well as possible in their financial situation.
Set up in the year 1975, the concept behind the earned income credit was that since poor workers were having to pay so much in income taxes that they could never hope to move up the financial ladder they needed to be able to pay less taxes. By means of the EIC, low income families are given back a large amount of the money that has been deducted from their pay because of taxes throughout the year.
As time has passed, the amount that the earned income credit returns to individuals has gone up. Supporters of the EIC assert that the earned income credit does more for low income workers than simply increasing the minimum wage would. This is because people who are awarded the EIC use the money they get back to make purchases that boost their local economy.
Income that is counted towards eligibility for the earned income credit is of three types. Firstly there is wages earned at a job. Wages include tips if you are a server in a restaurant. Any monies that are paid out to you by your employer such as bonuses are a part of this category.
Self-employed earnings are also eligible for the earned income credit. If you own your own business but the money you earn with it is not enough to sufficiently care for your family, you may be able to receive the EIC. Any and everything your business earns can be counted.
Any money earned by one of your dependents can also be used to obtain the EIC. For example, the money that your teenage son or daughter makes while working summers or before and after school can be counted by you in order to get the earned income credit. This is true even if they have not earned enough to have to file for taxes themselves. The combined total of your income and your children's will be used to determine your EIC.
The money that your investments earn for you is counted as income by the IRS, as is money you collect because of unemployment. These sources of income may reduce your chances of getting the earned income credit. For example, if your investments earn you more than $2,800 in one year, you are disqualified from the EIC.
Sadly, many tax filers are not even aware that they qualify for the earned income credit. Many people think they don't qualify or just are not aware of the EIC. Some people do not earn enough to have to file their taxes, but still qualify for the EIC. Be sure to check into the EIC so that you don't miss out on this opportunity.
Set up in the year 1975, the concept behind the earned income credit was that since poor workers were having to pay so much in income taxes that they could never hope to move up the financial ladder they needed to be able to pay less taxes. By means of the EIC, low income families are given back a large amount of the money that has been deducted from their pay because of taxes throughout the year.
As time has passed, the amount that the earned income credit returns to individuals has gone up. Supporters of the EIC assert that the earned income credit does more for low income workers than simply increasing the minimum wage would. This is because people who are awarded the EIC use the money they get back to make purchases that boost their local economy.
Income that is counted towards eligibility for the earned income credit is of three types. Firstly there is wages earned at a job. Wages include tips if you are a server in a restaurant. Any monies that are paid out to you by your employer such as bonuses are a part of this category.
Self-employed earnings are also eligible for the earned income credit. If you own your own business but the money you earn with it is not enough to sufficiently care for your family, you may be able to receive the EIC. Any and everything your business earns can be counted.
Any money earned by one of your dependents can also be used to obtain the EIC. For example, the money that your teenage son or daughter makes while working summers or before and after school can be counted by you in order to get the earned income credit. This is true even if they have not earned enough to have to file for taxes themselves. The combined total of your income and your children's will be used to determine your EIC.
The money that your investments earn for you is counted as income by the IRS, as is money you collect because of unemployment. These sources of income may reduce your chances of getting the earned income credit. For example, if your investments earn you more than $2,800 in one year, you are disqualified from the EIC.
Sadly, many tax filers are not even aware that they qualify for the earned income credit. Many people think they don't qualify or just are not aware of the EIC. Some people do not earn enough to have to file their taxes, but still qualify for the EIC. Be sure to check into the EIC so that you don't miss out on this opportunity.
About the Author:
Tire of barely keeping up with your credit card payment? Get some simple credit card tips on the Debtopedia website. Get a free copy of my report "Secrets Of Credit Card Debt" at http://www.debtopedia.com
posted by Debt Consolidation Loan at
7:52 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home