The DC Earned Income Tax Credit (EITC) is a special tax break, based on the federal EITC, designed specifically for low- and moderate-income workers. People who qualify for the EITC will pay less in taxes or even get cash back. The District’s Earned Income Tax Credit (EITC), based on the federal EITC, assists working lowincome residents through a refundable income tax credit that puts money back in the pockets of those who need it most.
What is the Washington DC Earned Income Tax Credit?
For the 2011 tax year, about 56,036 DC tax filers claimed a total of $53,459,777 in DC EITC, with an average benefit of $954 per household. The DC EITC is equal to 40 percent of the federal EITC credit. Like the federal EITC, the DC EITC is a refundable tax credit. This means that it not only reduces taxes owed, dollar for dollar, but if the EITC exceeds the taxes owed, then the household receives the balance as a refund.
DC Earned Income Tax Credit District of Columbia EITC
Earned Income Tax Credits provide tax refunds to working poor and near-poor families with children and boost the incomes of families seeking to work their way out of poverty. The federal government and 11 states, including the District of Columbia’s neighbor Maryland, already offer EITCs. In addition, Montgomery County just enacted its own EITC to augment Maryland’s state EITC
Who is eligible for the 2015 DC Earned Income Tax Credit (EITC)?
Since the DC EITC is based on the federal EITC, it is helpful to understand how the federal EITC works. The federal EITC is available to eligible working households based on income, the number of qualifying children in the household, and the household’s filing status. These criteria also impact the actual EITC benefit a household receives.
All filers who are eligible for the federal EITC are eligible for DC’s EITC. In addition, non-custodial parents between 18 and 30 “who are in compliance with a court order for child support payments” may claim DC’s credit even though they are not eligible for the federal credit
The EITC for workers without children is much less when compared to the credit for working families with children. Currently, a childless adult working full-time at minimum wage is ineligible to receive both federal and DC EITC benefits, while an individual with children making this same wage would receive the maximum benefit – as much as $5,891. The maximum federal EITC benefit for a worker without children is just $475 for a worker earning roughly $7,000.
Who qualifies for the DC Earned Income Tax Credit?
- You cannot have computed your federal AGI using the Alternative Minimum Tax (AMT) calculation.
- The amount of your D.C. taxable income on line 21 of your D-40 or line 5 of the D-40EZ is more than zero; and
- Your D.C. Adjusted Gross Income (AGI) is greater than the sum of D.C. personal exemptions and D.C. standard deduction and is less than or equal to the sum of your federal personal exemptions and your federal standard deduction.
DC Resident First-Time Homebuyers Credit for Certain Government Employees
This credit was originally limited to DC Police officers who are first-time homebuyers in DC. This $2,000 credit has been expanded. It is now available to all DC government employees, employees of a DC public charter school, and any person who has accepted an offer to be a DC police officer, firefighter, emergency medical technician, public school teacher at a DC public charter school. Except for DC police officers, the tax credit is limited to those employees who purchased their first principal residence in DC on or after October 1, 2007 and who are enrolled in the Employer Assisted Housing Program offered by the DC Department of Housing and Community Development. The credit is available for a 5-year period.
What is the amount of the DC EITC?
District taxpayers who are allowed the Earned Income Tax Credit in filing their federal individual income tax return and did not claim the District Low Income Tax Credit are allowed a DC EITC equal to 40 percent of the amount allowed by the Internal Revenue Service. District taxpayers who are parents of a minor child, are required to pay child support and who otherwise qualify are allowed a DC EITC equal to 40 percent of the amount that would have been allowed by the Internal Revenue Service.
In addition to the DC EITC, some working families with children can benefit from the federal Child Tax Credit. The District government wants all eligible city residents to claim these valuable tax credits.