Financial Education: Money Matters

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Tips to Increase Your Income

Earned Income Tax Credit
The EITC is a refundable federal income tax credit for people who work but do not earn high incomes. If you qualify, it reduces the amount of tax you owe, and it may give you a refund. You may even be eligible for an advance EITC, which allows you to receive part of the credit in each paycheck during the year.

The following eligibility requirements apply:

  • You must have a valid Social Security number.
  • You must be between 25 and 65 years of age.
  • You must have earned income. This does not include alimony, child support, welfare benefits, unemployment benefits, interest, dividends, pensions, and certain workforce payments.
  • Children must live with you for at least 6 months to claim additional benefits.

Benefits can range from $350 to $3,888. Rules and examples can be found in IRS Publication 596. A free copy of the application form and the IRS Publication is available at: www.irs.gov or by calling the IRS at 1-800-829-3676. You can also call the IRS directly at 1-800-829-1040 for assistance.

Any refund you receive as a result of taking the EITC will not be used to determine your eligibility for the following programs or how much you can receive from them:

  • Temporary Assistance for Needy Families (TANF)
  • Medicaid and supplemental security income (SSI)
  • Food stamps and housing assistance

Child Tax Credit

The Child Tax Credit can lower the amount of income tax you owe and increase any refund you might receive. The benefit can be as high as $500 per child. There are additional benefits for single working mothers. Information is available in IRS Publication 972. A copy of the tax credit application form and the IRS Publication is available at: www.irs.gov or by calling the IRS at 1-800-829-3676. You can also call the IRS directly at 1-800-829-1040 for assistance.

Eligibility requirements include the following:

  • The child must be 17 years of age or younger by the end of the tax year.
  • The child must be a U.S. Resident.

Credit for Child and Dependent Care Expenses

If you pay someone to care for your child under the age of 13, or other dependent who is not able to care for him or herself, you might be eligible for a tax credit. The tax credit can lower the amount of income tax you owe and increase any refund you might receive. To qualify, you must pay the child or dependent care expenses so you can work or look for work. Information is available in IRS Publication 503. A copy of the tax credit application form and the IRS Publication is available at: www.irs.gov or by calling the IRS at 1-800-829-3676. You can also call the IRS directly at 1-800-829-1040 for assistance.

Certified Public Accountants and other tax professionals may be available at local libraries and churches to provide free or low-cost help, during tax time, to determine if you qualify for these tax benefits. Remember, you are obligated to provide accurate information when applying for these benefits. Tax fraud is a serious offense.