The Wisconsin earned income credit is a special tax benefit for certain working families with at least one qualifying child. The earned income credit is refundable. This means that even workers who did not earn enough wages to have Wisconsin taxes withheld can receive the credit.
What is the Wisconsin Earned Income Credit?
The Wisconsin Earned Income Credit, like the federal EIC, is a special tax benefit for workers who earn low or moderate incomes. It lowers their taxes, supplements their wages, and makes work more attractive and affordable. Families with children who qualify for the federal EIC are automatically eligible for the Wisconsin EIC. Qualifying persons who file federal returns get back some or all of the federal income tax withheld from their pay during the year. Like the federal EIC, the Wisconson EIC is refundable. This means that even workers whose earnings were too small to have taxes withheld can get the EIC.
How to Calculate 2016 Wisconsin EITC?
The credit is calculated based on the number of children claimed as dependents by the filer. For tax year 2011, filers with one child may claim four percent of the federal credit. Filers with two children may claim 11 percent, and filers with three or more children may claim 34 percent of the federal EITC.
How to Qualify for Wisconsin Earned Income Credit?
To qualify for Wisconsin earned income credit for 2015, you must meet all of the following requirements:
- Qualify for the federal earned income credit.
- Have at least one qualifying child. The federal definition of a “qualifying child” applies for Wisconsin purposes.
- Be a full-year Wisconsin resident.
- File a joint return if you are married.Exception: You may claim the credit on a separate return if:
- You paid more than half the cost of keeping up a home for the year,
- Your spouse did not live in that home during the last six months of the year, and
- The home was, for more than half of the year, the principal home of your child for whom you are entitled to claim an exemption for federal income tax purposes.
What is the procedure for claiming the Wisconsin EIC?
- Claimants must file a Wisconsin tax return to receive the state EIC, even if no taxes are owed;
- File state Form 1 or 1A.
- The amount of the claimant’s federal EIC is needed to calculate the state EIC. For filers with one qualifying child, the state EIC is 4% of the federal EIC; for filers with two qualifying children, the state EIC is 11% of the federal EIC; for filers with three or more children, the state EIC is 34% of the federal EIC;
- If your tax return shows you owe taxes, you subtract your EIC credit and you will owe less or get money back. If you owe no taxes, but qualify for the EIC, you will get a refund check for your EIC amount.
- You can file state tax returns on-line, at no cost, through the Department of Revenue website
Wisconsin Homestead Credit
The Wisconsin Homestead Credit (HC) is available to low income Wisconsin residents who rent or own their home. The credit may lessen the impact of property taxes and rent on individuals with lower incomes. Working individuals may be eligible for up to a maximum tax credit of $1,168 if they were a Wisconsin resident for all of 2013 and can provide copies of rent receipts (if renting) or property tax receipt (if own home) and their family income was less than $24,680 for 2013.
Claiming Wisconsin Homestead Credit
The following terms apply to individuals who received a W-2 payment (Community Service Job [CSJ], W-2 Transition [W-2 T], At Risk Pregnancy [ARP], and/or Custodial Parent of an Infant [CMC]) in tax year 2013:
- If an individual received any amount of a W-2 payment in 2013 for any month in 2013, the individual’s property taxes and rent are reduced by one-twelfth for each month the individual received payment; or
- If an individual received a W-2 payment for all 12 months of 2013, the individual is not eligible for the homestead credit.
For more information on the HC, refer to the Homestead Credit.
How is the Wisconsin earned income credit calculated?
The Wisconsin earned income credit is based on a percentage of the federal credit.
|Number of Qualifying Children||Percentage of Federal Credit for 2015|
|0||No credit available|
|1||4% of federal credit|
|2||11% of federal credit|
|3 or more||34% of federal credit|
The EIC — and other tax credits — do not count as income in determining eligibility for benefits such as W-2, Medicaid, Food Stamps, SSI, or public or subsidized housing.