Don’t Miss out on your Money

It’s tax season again and everyone wants to get as much of a refund as possible. There are many credits the average taxpayer can claim, especially those who own their home. An often overlooked credit is the Earned Income Tax Credit, which was put in place to assist lower and middle income individuals and couples with qualifying children. Here are some basic guidelines for who qualifies.

Let’s begin with income guidelines. For the taxpayers with no qualifying dependents the credit is generally much smaller. For an unmarried individual, the income must be below $13,980 to qualify. For a married couple, the amount is $19,190. The maximum credit either could potentially receive is $475. The maximum credit jumps significantly when children are present as do the income requirements. For an individual filer with one child, income cannot exceed $36,920 and for couples with one child, not more than $42,130. The cap is three children or more. This group can obtain the highest of the maximum credits.

What exactly is a qualifying child or dependent? There are three general criteria that a child must meet in order for the parent/s to qualify. These include relationship, age and residency. Starting with the simplest of the three, residency, the IRS stipulates that the child in question must reside with the taxpayer for at least six months in the year. As for age, the child must be younger than the person claiming them and under nineteen years of age if not in school. If the child is still in school they can be claimed up to twenty four years old.

There is an exception to the age rules in the case of disability. One can claim as a qualifying “child” a person of any age who has a permanent disability. Relationship covers a good deal of ground. Aside from your own children whether by birth, adoption or marriage, you may also claim their children as long as the other criteria are met. In addition, siblings may be claimed even if they are not full siblings. Their children, your nieces and nephews may also be claimed for the credit.

The one rule that applies to all is that they must have a Social Security number. You must have earned income in that filing year, regardless of whether it was from a regular job or from self employment. There are additional rules and criteria for specific groups such as the clergy or military personnel. Generally speaking, however, this is a tax credit that can be of great help to many struggling families. Make sure you don’t miss out and leave your money on the table; check with your tax preparer today.