If you worked in 2012, don’t miss claiming the Earned Income Tax Credit

If you earned less than $50,270 from wages, self-employment or farming in 2012, you may qualify for a refundable federal tax credit called the Earned Income Tax Credit, or EITC. But you must file a federal income tax return claiming the credit to get it.

If you qualify for the federal Earned Income Tax Credit (EITC), you also qualify for the Minnesota Working Family Credit. You must first determine if you meet the federal requirements.

To claim the Minnesota Working Family Credit, you must file Form M1, Minnesota Individual Income Tax Return, and Schedule M1WFC.

EITC can be a big financial boost for low and moderate income working families and individuals.

Congress originally approved the EITC legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

The EITC remains little known, however, possibly because people move into and out of eligibility as their financial, marital and parental statuses change. If your income dropped in the past few years, you may qualify for the first time.
The IRS estimates four of five eligible workers claim and get their EITC.

In 2010, more than 27 million working families received the EITC. Yet research indicates that 20-25 percent of workers who are eligible each year fail to claim the credit.

Unlike other tax credits, both EITC eligibility and the amount of tax credit you may receive are based on several factors. These include: the amount of your income or combined incomes if married, whether you have qualifying children and how many. Workers without children also may qualify.

Filing status and income limits determine the amount of the credit. You may qualify for EITC even if you had no federal tax withheld or are not otherwise required to file.

The credit may sound complex, but it is worth exploring to see if you qualify.

The online EITC Assistant at www.irs.gov/eitc can help determine your eligibility and estimate the amount of your credit.

Remember: if you are eligible, you must file a federal income tax return, even if you are not otherwise required to file, and you must specifically claim the credit to get it. Find more information about EITC at www.irs.gov or in your tax software package.

According to the IRS, rural and non-traditional families — such as grandparents raising grandchildren — childless workers, and non-English speaking taxpayers are among those who most frequently overlook the credit.
Free tax help
 
Free help preparing your return and claiming EITC is available at volunteer income tax assistance sites. To locate a volunteer site, call your community’s 211 or 311 number for local services or call the IRS at 1-800-906-9887.

You may be eligible for free tax preparation if your individual income is at or below $30,000, or if your household income is at or below $50,000.

For specific eligibility requirements and a list of free tax preparation sites, call United Way 211 or 651-291-0211 from a cell phone.

Visit www.taxes.state.mn.us, and search for “free tax preparation sites.”

“Claim It!” is a United Way-led, community-wide effort to educate eligible families about existing tax credits, particularly the federal Earned Income Tax Credit. For more information, visit www.youclaimit.org.

Reprinted from the Minneapolis Labor Review

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