Intuit® is proud to once again partner with the IRS in kicking off the 10th Anniversary of Earned Income Tax Credit Awareness Day, a nationwide effort on Jan. 29 to educate the public around the Earned Income Tax Credit (EITC). The EITC is a huge benefit available to taxpayers with low to moderate incomes or large families, and tax preparers play an essential role in helping individuals and families understand the law and claim the credit when appropriate.
The EITC has helped lift millions of people out of poverty, but the IRS reports that millions of hardworking Americans are still missing out on this valuable tax credit, which could be worth up to $6,242 for tax year 2015. Many people may not be aware because they are newly qualified or choose, perhaps mistakenly, to not file a tax return since their income falls below the IRS income filing limit. Tax preparers should make sure their clients are aware of the EITC because for the millions of Americans who qualify, this could be the biggest paycheck they see all year.
According to the IRS, for the 2014 tax year, 27.5 million filers claimed the EITC, and the nationwide average credit was more than $2,400. One out of five qualifying filers, however, fail to claim this valuable credit. When combined with the Child Tax Credit (CTC), the EITC helps working families, many who live paycheck-to-paycheck, to pay down debt, save money for a rainy day or family emergency, or quite simply provide a little financial breathing room. Statistics show that in 2013, these credits lifted 9.4 million Americans out of poverty, including 5 million children.
To qualify for the EITC, your client must be a U.S. citizen, over the age of 25 or have qualifying children, not file “married filing separately,” and have earned income from working for someone or from running a business or farm, among other criteria. Additionally, 26 states and the District of Columbia have enacted EITCs, at the state-level, which can further benefit qualifying filers.
They also provide a wealth of resources to ensure you can look for ways to help qualifying taxpayers get the credit. Here are some of those resources:
- EITC Tax Preparer Toolkit
- 2015 EITC Income Limits, Maximum Credit Amounts and Tax Law Updates
- EITC Assistant: interactive tool regarding EITC qualification requirements
- How to avoid the most common EITC errors
- Frequently Asked Questions from Tax Preparers