Tax season is upon us, and in these tough economic times it is
important to do all you can to maximize tax savings. One way is to take
advantage of the Earned Income Tax Credit (EITC), which helps those who qualify
reduce their federal, state and city tax liability. It also may result in
a tax refund, which means more money in your pocket.
The Internal Revenue Service (IRS) describes the EITC as "a refundable
federal income tax credit for low to moderate income working individuals and
families. Congress originally approved the tax credit legislation in 1975 in
part to offset the burden of Social Security taxes and to provide an incentive
to work. When the EITC exceeds the amount of taxes owed, it results in a tax
refund to those who claim and qualify for the credit."
The IRS provides an EITC eligibility checklist, along with downloadable forms, publications, on line tools
and related resources.
Betsy Gotbaum has prepared a
user-friendly guide, The New York City Public Advocate’s Guide to the Earned
Income Tax Credit and Free Tax Preparation Services. The
city Department of Consumer
Affairs Office of Financial Empowerment also provides information about the tax credit, along with a flyer about how EITC may or may not
affect public benefits. On a city website, you'll
find a chart of income eligibility for the
2008 tax year.
What requirements must I meet before I can
apply for an EITC?
1. MUST have earned some sort of income
in 2008 through employment or self-employment;
2. MUST file your taxes for income
earned in 2008;
3. MUST have a Social Security Number for
yourself, your spouse (if filing jointly), and any qualifying dependents;
4. MUST have been a U.S. citizen or
resident alien for all of 2008, or a nonresident alien married to a U.S.
citizen or resident alien filing a joint return;
5. CANNOT have earned investment income
greater than $2,950 for the 2008 tax year;
6. CANNOT file as “married filing
separately;”
7. CANNOT be a qualifying child;
8.
CANNOT file Form 2555 or Form 2555-EZ.
More Information: Online, the city provides 2009 Tax Season Tax Credit Fast Facts. Among the Tax Credit Fast Facts:
- Working
families that earn less than $42,000 may be eligible for up to $6,500.
- Working
individuals who earned less than $16,000 may be eligible for up to $600.
- Eligible filers
must have investment income of less than $2,950.
- In most cases,
claiming tax credits does not affect eligibility for such benefits as Food
Stamps, Supplemental Security Income, Medicaid or subsidized housing. These credits
are not considered income when determining eligibility for these programs, but
they may be counted as a resource for some programs after a certain time frame.
The EITC is retroactive for three years, and a list
of free Volunteer Income Tax Assistance sites, along with related
information, is at
For help in finding a site near you, you also may call 311. If you have additional questions about EITC, please call my office at 212-669-7250.
Comments