I bet you weren’t aware that today is Earned Income Tax Credit Awareness Day. There are all kinds of crazy celebrations of obscure things every day.
As a dad of 4 kids and a husband who takes his turn packing my kids lunch we include a little note to our kids each day in their lunch. Last fall I found it challenging to come up with some unique material for the notes and we were barely a month into the school year. I stumbled across a daily list of holidays and the content of the lunch notes from that day forward has gone to a whole other level.
As a tax professional I am already aware of the Earned Income Tax Credit (EITC) so I don’t need a silly holiday. But I will take this opportunity to bring awareness of the EITC to others who only think about taxes this time of year, or for those procrastinators April 14th.
The EITC is a benefit for working people with low to moderate income. It is particularly beneficial to those with dependent children. The EITC has been around since 1975 and like most aspects of taxes has been changed, expanded and altered over the years.
Here are some EITC Fast Facts from the IRS (we can’t really call them Fun Facts, can we?)
Last year, more than 27 million eligible workers and families received more than $67 billion in EITC; with an average EITC amount of about $2,455.
EITC is for workers whose income does not exceed the following limits in 2016
$47,955 ($53,505 married filed jointly) with three or more qualifying children
$44,648 ($50,198 married filed jointly) with two qualifying children
$39,296 ($44,846 married filed jointly) with one qualifying child
$14,880 ($20,430 married filed jointly) with no children
Children must meet certain relationship, age, residency and joint return requirements to be a qualifying child.
You must file a federal income tax return to get the credit.
Unlike many tax credits the EITC can be greater than what you owe in taxes. So if you are average worker with an EITC of $2,455 and your tax is $500, you will receive a tax refund of $1,955.
Just like most aspects of the tax code there are people out there manipulating the EITC and the IRS has responded. Check out the post I shared earlier this week on the IRS delaying tax refunds. As a tax preparer we have more due diligence we are required to go through for our clients taking the EITC.
For those of you still reading I am impressed you stuck with this much information about taxes. I think you are now adequately aware of the EITC. If you would like more information or think you might be eligible for the EITC and need assistance preparing your tax return, contact our firm.
And for those of you worried my kids are reading about the EITC at lunch today, it is also National Chocolate Cake Day.