The Internal Revenue Service reports that the Earned Income Tax Credit (EITC) – one of the largest anti-poverty programs in the United States – raises over 6 million people above the poverty line each year. Yet, every year one out of five eligible workers fails to claim it. This leaves billions of dollars unclaimed.
Each year, The Thurston Asset Building Coalition partners with the AARP Tax-Aide Foundation to bring awareness to this valuable credit and provide FREE tax preparation services for low-to-moderate-income working people.
We want to get the word out to those who are eligible, that they could receive up to $6,000 or more in tax refunds when claiming the Earned Income Tax Credit and Child Tax Credit. Here are five things you should know about the Earned Income Tax Credit:
What is the Earned Income Tax Credit (EITC)
An earned income tax credit (EITC) is a tax benefit designed to help low- to moderate-income working people get ahead. It reduces the amount of taxes owed, and refunds the difference if the credit is larger than the amount owed. Eligible workers who claim the EITC on their tax return can receive a refund even if they do not owe income tax.
Who Is Eligible
EITC is complex. It varies by income, family size and your filing status. To be eligible, you must have earned income or certain disability income. This means you must have income from working for someone or working for yourself.
For tax year 2016, a worker with no children who makes less than $14,880 can receive up to $506. Single parents with three or more children who make less than $47,955 are eligible for $6,269. Married couples must file taxes jointly. Couples earning less than $20,430 qualify for a credit of $506. Those with three or more children qualify for $6,269 if they make less than $53,505. The IRS estimates that more than 28 million citizens received over $66 billion in earned income tax credits in tax year 2013.
How Can It Help You?
By arriving as a single lump sum, the credit also functions something like an instant savings account for workers living paycheck to paycheck, allowing them to make big purchases they otherwise couldn’t afford.
EITC refunds can boost financial assets and savings, which may help working families avoid future financial setbacks. To help families looking to save their tax refund for a rainy day, the Thurston Asset Building Coalition also encourages those without bank accounts to sign up for a free or low-cost checking account to expedite returns and encourage savings.
Will It Affect Your Eligibility for Other Benefits?
Claiming the EITC does not affect eligibility for other benefits like SNAP (food stamps), SSI, Medicaid, cash assistance, or public housing. A saved tax refund does not count against federally-funded benefit program resource/asset limits for 12 months after the refund is received.
Where Can I Find Free Tax Preparation Services
The Thurston Asset Building Coalition in partnership with the AARP Free Tax Prep Foundation offer free tax preparation services for low-to-moderate-income working people. The sites are staffed by trained and certified volunteers.
These volunteers, trained by the AARP Foundation Tax-Aide Program and certified by the IRS, ask you the needed questions to find out if you qualify for the EITC and other refundable tax credits like the Child Tax Credit. Volunteers at Tax-Aide sites, also prepare and e-file (electronically file) your tax return at no cost to you. The program welcomes taxpayers of all ages and backgrounds.
Find a FREE Tax-Prep site near you.