Community Action Programs
About Earned Income Tax Credit
Workers with Children May Qualify for Tax Relief
Linda Green spent 2007 juggling two part-time jobs and the schedules of her three young children. With an income of $30,500 and daycare costs, monthly rent and other bills, Linda watches her finances carefully.
Like Linda, when millions of Americans in similar situations prepare their 2007 taxes, they could qualify for the Earned Income Tax Credit (EITC). The Credit reduces the amount of federal income tax owed by qualified low-income workers, who may receive the EITC as a refund.
Linda picked up a brochure on the EITC at her local Community Action office. After preparing her taxes last year, Linda owed the IRS $464. Because she had qualifying children and met the eligibility and income requirements, she qualified for an EITC of $1,529. The credit eliminated the additional taxes she owed and gave her a refund of $1,065.
According to the IRS, during tax year
2005, there were 36,521
Congress enacted the EITC in 1975 to offset the burden of Social Security taxes on low-income taxpayers, supplement wages and make employment more attractive than welfare. Yet studies have shown that substantial numbers of eligible workers fail to claim the Credit because they don’t know about it or don’t know they qualify.
Taxpayers employed for at least part of 2007 may be eligible for the EITC, based on these general requirements:
· Earned less than $12,590 ($14,590 if married filing jointly), have no qualifying children, and were at least age 25 but under 65 at the end of 2007.
· Earned less than $33,241 ($35,241 if married filing jointly) and have one qualifying child.
· Earned less than $37,783 ($39,783 if married filing jointly) and have more than one qualifying child.
Each year many workers qualify for the EITC for the first time. The EITC benefits not only qualified workers, but local economies as well.
Champlain Valley Office of Economic Opportunity