Make less than $48,000? You may be due a break
Tuesday, March 16, 2010
Iowa’s First Lady Mari Culver has been meeting with media across the state to press a single message:
Get the word out to Iowans about the Earned Income Tax Credit in time for them to incorporate it into their filings.
One in four Americans who are eligible to claim the credit — aimed at low- to medium-income earners — don’t, costing the individual families up to $5,600.
Bottom line: If you are working and make less than $48,279 (or single and making less than $43,279), you’ll want to investigate whether you are eligible for a tax credit that can be close to $5,700 — depending on how many children you have and other criteria that are easy to figure out through the IRS.
“People are surprised that they’re eligible for it when they don’t consider themselves really low-wage earners,” Culver told the Daily Times Herald and other media in Denison recently.
She said 20 to 25 percent of taxpayers are eligible for the credit.
“This year its even more important because of the lingering national recession,” Culver said.
Congress originally approved the tax-cre dit 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.
To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to have a filing requirement.
Here are some of the income examples:
A married couple who make less than $48,279 (adjusted gross income) and have three qualifying children can claim the credit, which can be up to $5,657. The Web site www.irs.gov has details on the credit.
A single person with one child can make less than $35,463 to qualify for a credit of up to $3,043.
Culver noted that the United Way and other charitable groups help organize free tax-preparation sites for lower-income Iowans. A list of these tax-preparation sites can be found on the Iowa Department of Revenue site at www.iowa.gov/tax.
Culver said using the credit can mean a big shot in the financial arm for communities in Iowa. In one recent tax year residents in the City of Waterloo alone left $25 million unrecovered through the program.
There’s also a state earned income tax credit. Gov. Chet Culver expanded that in 2007, making the credit available to more than 85,000 additional Iowans. In tax year 2007, 202,100 Iowans used the earned income tax credit and claimed $23.6 million in the form of lowered taxes and refunds.
The federal stimulus package provides a temporary increase in EITC and expands the credit for workers with three or more qualifying children. These changes are temporary and apply to 2009 and 2010 tax years.
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