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The Earned Income Tax CreditMany taxpayers unaware they qualify for larger tax refunds BATON ROUGE — Many taxpayers are unaware they qualify for the federal Earned Income Tax Credit (EITC) that can mean as much as an additional $4,000 in their federal income tax refund, says Revenue Secretary Cynthia Bridges.
“The federal EITC is designed to assist moderate and low-income taxpayers with dependent children by returning some of their hard-earned money,” Bridges says. “Unfortunately, many of the taxpayers who qualify either don’t file a return in order to receive the credit, or don’t check to see if they qualify when they file.”
Bridges points out that Governor Kathleen Blanco has made taxpayer awareness of EITC one of her priorities. “The Louisiana Department of Revenue is making a targeted attempt this tax season to reach those taxpayers who may qualify for EITC. We want them to check with our Department or a professional tax preparer to see if they qualify,” Bridges says.
The state Department of Revenue is again providing tax assistance and electronic filing in all regions of the state through the Volunteer Income Tax Assistance (VITA) program. Bridges says volunteer representatives will be on hand at a number of locations during February to assist taxpayers with the preparation of their federal 1040A and 1040EZ tax returns, as well as the state return. After preparation is completed, tax returns will be filed electronically free of charge. “Taxpayers should use this free assistance opportunity to see if they qualify for EITC,” she points out.
The following are some facts about the federal Earned Income Tax Credit: To qualify, taxpayers must meet certain requirements and file a federal tax return, even if they did not earn enough money to be obligated to file a federal tax return. The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing, or most Temporary Assistance for Needy Families (TANF) payments.
To claim the EITC, taxpayers must meet the following rules:1. Rules for all claimants· Must have a valid Social Security Number.· Investment income is limited to a certain amount.· Filing status cannot be “married filing separately.”· Must have earned income.· Must be a U.S. citizen or resident alien all year.· Cannot be a qualifying child of another person.· Cannot file Form 2555 or Form 2555-EZ (relating to foreign-earned income).2. Rules if claimants have a qualifying child· Child must meet the relationship, age, and residency tests.· Qualifying child cannot be used by more than one person to claim the EITC.3. Rules if claimants do not have a qualifying child· Must be at least age 25, but under 65.· Cannot qualify as the dependent of another person.· Must have lived in the United States more than half of the tax year.
Earned income includes all taxable income gained from working. Nontaxable earned income generally does not count as earned income. To qualify for the EITC, taxpayers must work full or part-time and have earned income during the year. If married and filing jointly, at least one spouse must work and have earned income.
Earned income includes:· Taxable wages, salaries, and tips.· Net earnings from self-employment.· Gross income received as a statutory employee.
Earned income does not include: · Interest and dividends.· Pensions and annuities.· Social Security and railroad retirement benefits.· Alimony and child support. Taxpayers may claim the EITC for tax year 2003 if their total earned income is at least $1 and their earned income and adjusted gross income are both less than the following:· $11,230 ($12,230 if married filing jointly) without a qualifying child.· $29,666 ($30,666 if married filing jointly) with one qualifying child.· $33,692 ($34,692 if married filing jointly) with more than one qualifying child.
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