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Earned Income Tax Credit
 

The Earned Income Tax Credit (EITC) is a “refundable tax credit” for working, low-income individuals and families. Even workers whose earnings are too small to owe income tax can get the EITC! To get it, one must file a federal tax return with the IRS.

Massachusetts also has an Earned Income tax credit (EIC). To get the credit, you need to file a state tax return and send it to the Massachusetts Department of Revenue. The amount of the credit is based on the amount received on the federal EITC.

The EITC lifts more low-income families out of poverty than any other benefit program.

Plea for outreach 

Many families will need to rely on these credits to help them keep up with household bills and even to help stave off more dire situations, such as mortgage foreclosure. They may not realize they could qualify for the credits. Millions of eligible individuals do not file for the credits and ended up forgoing millions of dollars for which they qualify.  Now, when the stakes are so high for struggling families, your involvement in outreach can help ensure that these vital benefits do not go unclaimed.

Free Tax Preparation- Volunteer Income Tax Assistance (VITA) programs provide IRS-certified volunteers who offer free tax filling assistance to people with low to moderate income (roughly $58,000 or less), persons with disabilities, elders and people with limited English proficiency.

Eligibility & Benefits: Federal credit

• You must have worked and earned income
• You must have a valid Social Security number
• You cannot be counted as a “child” by someone else
• There are more rules about age, citizenship, and non-earned/foreign income.

Note:  Alimony and child support payments do not count towards income.

*A “qualifying child” can be one’s...

• Biological or adopted child
• Stepchild
• Foster child
• Brother or sister
• Stepbrother or stepsister
• or the children of any of these people.

A “child” must

• be younger than the person claiming the child;
• not have filed a joint return other than to claim a refund; and
• under age 19 -exceptions:
  • full-time students (up to 24 years old in 2009) or
  • permanently or totally disabled (any age).

Benefits: State credit

• If one qualifies for the federal credit the Massachusetts credit will be 15% of the federal credit.

Will the money count against public benefits, like welfare or SNAP/Food Stamps? 

No. It will not count against welfare, SNAP/Food Stamps, SSI, Medicaid, TAFDC or public housing. But some benefits programs may have rules about how long you can keep it in your bank account without spending it.

See:   www.irs.gov/ eitc or www.mass.gov/DOR or www.masslegalhelp.org/income-benefits/eitc.

 

Also see "Underutilized Cash Assistance: the Earned Income Tax Credit & Free Tax Preparation" - MGH Community News, January 2011