Earned Income Credit (EIC): What Is It?
In the world of taxes, tax credits help taxpayers to lower their tax bill. One such credit is the Earned Income Credit, or EIC. This credit was instituted as a way to help low income wage earners to rise above their circumstances.
Set up in the year 1975, the concept behind the earned income credit was that since poor workers were having to pay so much in income taxes that they could never hope to move up the financial ladder they needed to be able to pay less taxes. By means of the EIC, low income families are given back a large amount of the money that has been deducted from their pay because of taxes throughout the year.
The amount of the earned income credit has increased over the years. Those who fought for the tax credit agree that it is a better way to help people living in poverty than trying to raise the minimum wage. People that receive the tax credit sow that money back into the economies of their neighborhoods where it helps everyone.
There are three types of EIC eligible incomes. The first is money that is earned at a job. This money would include any wages earned by means of tips. If you are given a bonus by your employer, it can also be counted towards the earned income credit.
Self-employed earnings are also eligible for the earned income credit. If you own your own business but the money you earn with it is not enough to sufficiently care for your family, you may be able to receive the EIC. Any and everything your business earns can be counted.
Lastly, money made by someone under your care is considered. Teenagers have weekend and/or summer jobs. The money may not be enough for them to file a return of their own, but it is added to what their parents earn. Together, the income determines the amount of the earned income tax credit you qualify to receive.
The money that your investments earn for you is counted as income by the IRS, as is money you collect because of unemployment. These sources of income may reduce your chances of getting the earned income credit. For example, if your investments earn you more than $2,800 in one year, you are disqualified from the EIC.
Sadly, many tax filers are not even aware that they qualify for the earned income credit. Many people think they don't qualify or just are not aware of the EIC. Some people do not earn enough to have to file their taxes, but still qualify for the EIC. Be sure to check into the EIC so that you don't miss out on this opportunity.
Set up in the year 1975, the concept behind the earned income credit was that since poor workers were having to pay so much in income taxes that they could never hope to move up the financial ladder they needed to be able to pay less taxes. By means of the EIC, low income families are given back a large amount of the money that has been deducted from their pay because of taxes throughout the year.
The amount of the earned income credit has increased over the years. Those who fought for the tax credit agree that it is a better way to help people living in poverty than trying to raise the minimum wage. People that receive the tax credit sow that money back into the economies of their neighborhoods where it helps everyone.
There are three types of EIC eligible incomes. The first is money that is earned at a job. This money would include any wages earned by means of tips. If you are given a bonus by your employer, it can also be counted towards the earned income credit.
Self-employed earnings are also eligible for the earned income credit. If you own your own business but the money you earn with it is not enough to sufficiently care for your family, you may be able to receive the EIC. Any and everything your business earns can be counted.
Lastly, money made by someone under your care is considered. Teenagers have weekend and/or summer jobs. The money may not be enough for them to file a return of their own, but it is added to what their parents earn. Together, the income determines the amount of the earned income tax credit you qualify to receive.
The money that your investments earn for you is counted as income by the IRS, as is money you collect because of unemployment. These sources of income may reduce your chances of getting the earned income credit. For example, if your investments earn you more than $2,800 in one year, you are disqualified from the EIC.
Sadly, many tax filers are not even aware that they qualify for the earned income credit. Many people think they don't qualify or just are not aware of the EIC. Some people do not earn enough to have to file their taxes, but still qualify for the EIC. Be sure to check into the EIC so that you don't miss out on this opportunity.
About the Author:
Tire of barely keeping up with your credit card debt? Learn some simple credit card tips on the Debtopedia website. Get a free copy of my report "Secrets Of Credit Card Debt" at http://www.debtopedia.com
posted by Credit Counseling at
1:46 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home