Workers can qualify for the Earned Income Tax Credit, or EITC, by gaining taxable earnings from an employer, business or farm and ranking in the correct income bracket based on specific household demographics, according to the Internal Revenue Service. While a childless person between the ages of 25 and 65 is eligible for the EITC, having qualifying children directly increases the credit total.Continue Reading
The federal EITC was designed to promote financial stability for low- to moderate-income individuals by offsetting taxes, according to the Center on Budget and Policy Priorities. The organization estimates that the credit helped approximately 6.5 million people move above the poverty line in 2012.
To claim the EITC, the taxpayer must have a valid Social Security number and cannot be a married person filling independently, the IRS states. The person must also be a U.S. citizen, a legal resident or a non-resident alien filing jointly with a qualifying spouse. Dependents can't file for the credit, and filing Form 2555 or Form 2555 EZ for foreign income disqualifies taxpayers from receiving the EITC.
In the 2013 tax year, a childless person with an income at or below $14,340 could earn up to $487 from the EITC, according to the IRS. A person with three or more children could have a maximum income of $46,227, resulting in a credit of $6,044. The maximum qualifying income is increased at all levels for couples filing joint returns.Learn more about Taxes
Beginning in 2016, the maximum amount that a family can receive as a federal Earned Income Tax Credit, or EITC, by filing IRS Form 1040 is $6,242, as reported by Forbes magazine. This amount will be applicable to married taxpayers who are filing jointly in 2016 and who have three or more children. The amount reflects an increase of $99 compared to the $6,143 maximum amount allowed for families of the same size filing in 2015 for the 2014 tax year.Full Answer >
As of 2015, recent tax laws that help the poor include the Earned Income Tax Credit and the Saver's Credit, reports Bankrate. Additionally, couples with children who have low incomes can significantly reduce their tax burdens by claiming personal exemptions and standard deductions.Full Answer >
Tax credits created in 2013 include the Earned Income Tax Credit for people who work but do not earn much, with a maximum of $5,891 and the Child and Dependent Care Credit for care expenses of a qualifying child or disabled dependent. Other tax credits are the Child Tax Credit for qualifying children under age 17 and the Retirement Savings Contribution Credit, states the IRS.Full Answer >
Business owners must file Schedule C, Form 1040, Profit or Loss From Business if the business engaged in an activity for income or profit and is actively involved in the activity regularly and continually, notes the Internal Revenue Service (IRS). The form is for businesses operated as sole proprietorships. People with hobbies or sporadic activity do not qualify as businesses, and income from those types of nonbusiness activities are reportable on Line 21 of Form 1040 without filing a Schedule C.Full Answer >