Money in Your Pocket: The Earned Income Tax Credit
January 29, 2010
Every penny counts in today’s economy, yet many working people are overlooking an important tax credit that could put up to $5,657 in their pockets. While over 1.5 million New Yorkers claimed the Earned Income Tax Credit (EITC) last year, putting an average of $2,011.49 in the hands of struggling New Yorkers, the IRS estimates that one in four eligible taxpayers miss out.
First offered in 1975, the EITC is a refundable credit for people who work, but do not have a high income. It is the federal government’s largest benefits program for working families.
Credits are calculated based on your income and the number of children in your family. I have detailed below, but the IRS website has a table that summarizes this information.
For the 2009 filing year, the new maximum credit is $5,657 for a family with three or more children; $5,028 for a family with two children; $3,043 for a family with one child; and $457 for a family without children.
Head of household filers who earned less than $43,279 (for a family with three or more children), $40,295 (for a family with two children), $35,463 (for a family with one child), and $13,440 (for a family with no children) may be eligible. Income limits are $5,000 higher for each category of family where the taxpayer’s status is married filing jointly.
Eligible taxpayers must file federal income tax returns to receive the credit – even if they are not otherwise required to file.
There are also state and city versions of the EITC that can be claimed by eligible taxpayers, substantially increasing the total your family may get in refunds. For more information, I encourage New Yorkers to visit www.eitc.irs.gov.
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