$$$ In Tax Credits

• Who is eligible for the EITC?
  
  Workers who qualify for the EITC must file a federal tax return in order to access the credit, even if they would normally not do so because their earnings are too low to pay taxes. Taxpayers must file either Form 1040 or Form 1040A and attach Schedule EIC.
  
  Those eligible for the EITC must be able to answer “YES” to the following for the year 2007:
  

  1. I had earned income from employment or self-employment.
  2. My investment income (such as bank account interest) was $2,900 or less.
  3. My tax filing status is NOT married filing separately (if you are married, you must file jointly).
  4. I have been a U.S. citizen or a resident alien all year OR a non-resident alien married to a U.S. citizen OR a resident alien who is filing a joint return.
  5. I am NOT a qualifying child being claimed on another person’s tax return.
     A qualifying child must:
     • Be your son, daughter, step-child, eligible foster child (or descendant of any of them, for example a grandchild), brother, sister, half-brother, half-sister, step-brother, step-sister (or a descendant of any of them, for example a niece or nephew). Under certain circumstances, a child who is not a relative but is living in your home may meet the guidelines for a dependent child. Ask your tax preparer if this is your situation.
     • Be under age 19 at the end of 2007, a full-time student under the age 24 at the end of 2007 or have a permanent and total disability at any time during the year;
     • Have lived with the taxpayer in the United States for more than half of the year.
  6. If I do not have a qualifying child, I:
     • am at least 25 years of age but under 65 at the end of 2007;
     • lived in the United States for more than half the year (military personnel overseas are considered to be living in the U.S. while on active duty); and
     • am not the qualifying dependent of another person.

  
  Click here to view the IRS EITC Eligibility Assistant to see if you qualify:
  http://apps.irs.gov/app/eitc2007/SetLanguage.do?lang=en
  
  
• Can Tax Filers File or Amend Existing Returns to Claim EITC from Earlier Years?
  
  YES. If you believe that you were eligible for the EITC for this year and/or one or both of the past two years but failed to claim it, you can either:

  • File a new tax return for this year and the past two years, if you did not already file a tax return, and claim the EITC; or
  • File an amended return if you have already filed a tax return this year and the past two years but failed to claim the EITC, even though you were eligible.
  • If you are not certain whether you qualify, be sure to ask your tax preparer to check for you.

  Some families are eligible for tax credit refunds for up to three years, potentially worth thousands of dollars. The IRS website has tax forms and eligibility requirements for prior years, or ask your tax preparer at a free tax prep program or elsewhere to file an amended return for you.
• What is the Advance EITC?
  
  The Advance Earned Income Tax Credit (AEITC) allows some tax payers to receive some of their EITC refund in their paychecks and then the rest when they get their tax refund, rather than as one lump sum. For those that qualify (meaning that they are eligible for the EITC and have at least one qualifying child), they can receive part of their EITC refund amount in each paycheck during the year that they qualify. In order to receive the advance credit, individuals must fill out a W-5, the Earned Income Credit Advance Payment Certificate. This form is available on the IRS website and/or should be accessible through employers. For more information about the advance EITC, go to http://www.irs.gov/individuals/article/0,,id=96515,00.html.
• What Other Tax Credits And Benefits Should I Know About?
  
  • Child tax credit (CTC)
    Tax filers with children may be entitled to a child tax credit for each qualifying child. Tax filers must provide the name and identification number (usually the social security number) of each qualifying child on their federal return. The maximum amount of the credit is $1,000 for each qualifying child.
    
    The Child Tax Credit may be limited depending on the amount of the tax filer’s tax liability and their modified adjusted gross income. See the Form 1040 or 1040A Instructions for more information.
  • Child and dependent care credit
    The Child and Dependent Care Credit is available for tax filers who had to hire someone to provide care for a child or other dependent (for example a spouse or parent) who is not capable of self-care. In order to be eligible, the person claiming the credit must have hired a caregiver in order to be able to go to work. The child can be of any age as long as they are not capable of self-care, for example due to disability. The same is true of a spouse or parent. Please go to the IRS link below for in-depth information on eligibility.
    • IRS eligibility information: http://www.irs.gov/newsroom/article/0,,id=106189,00.html
  • Credit for the elderly or people with disabilities
    The Credit for the Elderly and Disabled is available to those who are age 65 or older or to those younger than 65 who are retired because of permanent and total disability. The eligibility requirements include being a U.S. citizen or resident as well as restrictions on both sources and amounts of income. Please see the IRS links below for detailed eligibility guidelines and the AARP Tax Aide link below for tax resources for older Americans
    • Links to IRS information:
      • Eligibility overview: http://www.irs.gov/taxtopics/tc603.html
      • IRS publication 524: "Credit for the Elderly or Disabled" http://www.irs.gov/publications/p524/index.html
      • Link to AARP Tax Aide: http://www.aarp.org/money/taxaide/
  • Tax Credits and Deductions for Education
    A variety of tax credits for education-related expenses and savings programs are available. 
    For updated information on education tax credits and deductions and related publications from the IRS, please click here: http://www.irs.gov/faqs/faq-kw52.html
  • Adoption Credits
    Families that have adopted a child are eligible to deduct adoption expenses in two ways: as both a tax credit and as an income exclusion.  For the tax credit, qualifying adoption expenses per child up to a certain limit may be deducted from the taxpayer’s tax liability as a tax credit.  In addition, if the taxpayer’s employer has contributed to adoption expenses, an additional amount for each adoption may be excluded from the taxpayer’s gross income.  For detailed information on the Adoption Tax Credit, go to the following IRS link: http://www.irs.gov/taxtopics/tc607.html

Govbenefits.gov is a free and confidential prescreening tool that allows you to search for benefits that you may be eligible to receive.  The website allows you to search benefits by state or category and provides links to other prescreening tools such as food stamp eligibility.