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Earned Income Tax Credit

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Transcript for Earned Income Tax Credit

This is Jean Wetzler.

I'm talking with Phyllis Grimes about the EITC.

Phyllis, what is EITC?

EITC stands for Earned Income Tax Credit.

As the name implies, it's for people who work for a living but don't make a lot of money.

The intent of EITC is to offset the burden of Social Security taxes on lower-earning workers.

EITC is a refundable credit, meaning taxpayers can receive refunds if their EITC and federal withholding exceed their tax liabilities and other debts, even if they had no tax withheld.

Even though it's one of the largest benefit programs for working families, EITC is one of the most overlooked tax credits.

We estimate that one in four taxpayers eligible to receive the EITC fails to claim it, so we're trying to get the word out - especially to struggling self-employed taxpayers.

EITC can put up to $4,824 in their pockets and help make life a little easier in these hard times.

What are the qualifications for claiming EITC?

Eligibility depends on several factors, such as the amount of your earned income; whether or not you have children - and how many children; your age, and so forth.

Taxpayers can use the online EITC Assistant at IRS.gov to determine whether they qualify, or look in their tax packages for more information.

The bottom line is: if you earned less than $42,000 last year, you may qualify.

So it's worth checking it out.

Although someone may not have qualified in prior years, if their financial, marital or parental status changed this year, they should see whether they qualify this year.

It's too much money to leave on the table.

How do those who qualify for EITC claim the credit - and what help is available?

Taxpayers with children claim the credit by filling out Schedule EIC and filing it with their individual income tax returns.

Taxpayers without children may file Form 1040EZ.

There are volunteer assistance sites in many communities that will prepare tax returns free of charge for those claiming the EITC.

Many communities have 211 or 311 telephone numbers to locate vital community services.

If not, taxpayers can call the IRS at 1-800-906-9887 for information about volunteer assistance sites in their communities.

Taxpayers can also get help filing and claiming EITC at their local IRS Taxpayer Assistance Center.

Those who are inclined to "do-it-themselves" may be eligible to file electronically using Free File on IRS.gov.

If so, the software will compute the amount of their credit.

You must file a federal tax return to receive EITC, even if you're not otherwise required to file.

And some states have a similar tax credit, increasing the dollars due these workers.

Is there anything employers can do to help their employees?

Oh, yes! Employers can alert their workers to this valuable credit.

We have a special page on IRS. gov with resources and communication tools just for employers. Just type EITC into the search box.

Thank you, Phyllis.

I've been talking with Phyllis Grimes of the IRS.

This is Jean Wetzler.

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