The federal government has tax plans in place to assist those members of our society who earn moderate-to-low incomes. It’s given out in the form of a tax credit called the earned income tax credit, and it’s available to both working families with children, and for those without children, although the amounts at which it’s offered differ between the two. The original purposes of the tax credit were to benefit those with children, and to offset the costs of caring for children—daily needs, day care, etc.—while balancing out an obvious income discrepancy. The tax credit is often bundled with the political talk of a change to the minimum wage.
Earned Income Tax Credit
For those who qualify for the credit, the amount will be calculated depending upon a person’s income and the number of children they have. To qualify a person needs to be earning an income from working—income derived from other outside sources—trust, etc.—does not apply. Also, you must have a social security number, and that number should be issued before the date of your tax return. For those wanting to qualify for the earned income tax credit, who do not have children, you must have worked for someone in that tax year, or you could have run a farm or business, and earned less than a predetermined amount.
If you are intending to file for the earned income tax credit, you must file your tax return in one of the following ways. If you are married, then you must file your return as married filing jointly—you cannot claim the earned income tax credit if you file married, but filing separately (this is to prevent people from receiving the benefit, when they have other means of a joint income). The 2016 income requirements can be found here: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit.
If you have any questions as to whether you, or you and your family, qualify for the tax credit call Practical Taxes today. Also, having a quality accountant to prepare your taxes may prove invaluable, if indeed, you qualify for that credit, or others like it.
Practical Taxes is a full service accounting firm in Billings, Montana. We can help you get the most from your taxes, and make sure that you will get the maximum refund every year. But we don’t just do taxes! We can help with your bookkeeping, payroll, bank reconciliation, budgeting, and more. Give us a call at 406-894-2090 to learn more.