2009 Earned Income Tax Credit (EITC) changes

2009 EITC ChangesThe Earned Income Tax Credit (EITC) is one of the few refundable tax credits available to the “average” tax payer. It is designed for the low-income individual by offsetting any income tax liability. It is important and, unfortunately, a target for fraudulent filings because any balance that remains after the tax liability is covered will be refunded to the tax payer. When a person supports dependents, the refundable credit can be significant.

To file for and receive EITC, you need:
• US citizenship (or year-long resident or non-resident alien married to a US citizen filing jointly) with a social security card valid for work
• Earned income from either employment or self-employment
• An IRS tax filing status other than Married Filing Separately (MFS)
• To have no one else able to claim you as a Qualifying Child (QC)

If you are claiming EITC and do not have a QC yourself, you need:
• To be at least 25 years old (but under 65 years old on December 31).
• Have lived in the US for more than 6 months.
• Not qualify as some one else’s dependent.

As of 2009, families with 3 or more qualified children will receive additional credit for the third child. The maximum EITC refunded is:
• $457 if you do not have a QC
• $3,043 if you have one QC
• $5,028 if you have two QC
• $5,657 if you have three or more QC

Maximum thresholds of earned income for EITC eligibility has increased in 2009 as follows:
• Below $13,440 ($18,440 if married filing jointly, MFS)
• Below $35,463 ($40, 463 if MFS) with one QC
• Below $40, 295 ($45,295 if MFS) with two QC
• Below $43,279 ($48,279 if MFS) with three or more QC

Consult a qualified tax preparer.