What is Earned Income Credit?

A couple of years ago, I did my taxes and mailed it to the IRS. Fortunately, I was going to get a refund. Any amount is better than having to send Uncle Sam an additional check. However, when the check came in the mail, I was shocked to discover the refund was even more than expected. What? The IRS actually gave me more money! I must be dreaming! Then, I pulled out a note that said I qualified for Earned Income Credit. Okay. Great! But, how did I qualify?

Well, like everything else with the IRS, nothing is stated in two sentences or less. Everything takes a few trees to explain-if you know what I mean. Briefly speaking, EIC is for parents or guardians who have a minor or college student who lives with them for the majority of the year, who also qualifies as a dependent. Plus, they have an upper income limit and actually have to be earning an income, not just living off of pensions, social security, or other forms of income that do not require you to have a job.

Since my ex-husband makes too much to qualify, and my children live with me for at least 6 months out of the year, I get to claim Earned Income Credit. Curious, I did some checking and found out I can make almost $37,000 a year and still be able to claim EIC. If I were married, the amount is increased by about $2,000.

The pages of information also state that you can actually get more money returned than actually paid in, if your EIC on your adjust gross income is low enough. So, if you are struggling with a low-paying job, or you are self-employed and do not make over the limit, you may qualify to get a major tax break, if you still have children living at home.

Especially in these hard economic times, it is difficult to afford raising a family. Kids grow out of their clothes almost before you get them home from the store; growing spurts mean lots of food to pour down seemingly hollow legs; and providing health care can be a challenge. So, parents need all the help they can get. If you think you may qualify for Earned Income Credit, check it out! It can make a big difference in taxes this year.

Tina

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