The earned income tax credit which is also commonly known as the EITC, was established by Congress in the tax code in 1975. The EIC provides direct cash assistance to lower income working parents and individuals with payments that occur through the tax system.
There are some important development occurring with the earned income tax credit for 2013. For example, the EITC will be higher in 2012 and 2013 than it was previously in year 2011. This increase in benefits is mainly because the maximum amount of earned income used to calculate the credit and the phase-out income level are indexed for inflation on annual basis.
The following information is from the IRS website and could possibly change in the future. During the 2013 tax year, to be eligible for the earned income tax credit, a taxpayer must have an adjusted gross income (AGI) that is less than the following. Taxpayers can claim the EITC on their income tax returns and will receive their EITC the same way that they would receiving their tax refund.
- $46,227 ($51,567 married filing jointly) with three or more qualifying children
- $43,038 ($48,378 married filing jointly) with two qualifying children
- $37,870 ($43,210 married filing jointly) with one qualifying child
- $14,340 ($19,680 married filing jointly) with no qualifying children
Tax Year 2013 maximum earned income tax credit:
- $6,044 with three or more qualifying children
- $5,372 with two qualifying children
- $3,250 with one qualifying child
- $487 with no qualifying children
Investment income must also be $3,300 or less for the year.
In order to be eligible for the earned income tax credit (EITC) and taxpayer must file a tax return. That is why it is important to keep track of information that might be necessary to fill out a tax return and is important to file a tax return on the due date to ensure that your EITC claims is processed as fast as possible.
Recently, the government has noticed significant fraud and abuse associated with taxpayers claiming the EITC. Therefore, the IRS requires all tax preparers to submit Form 8867 that has certain questions when a return is submitted. This has helped cut down on taxpayer abuse.
If you are preparing your own taxes and mailing them to the IRS, it is imperative that you submit this form with your tax return. Failure to submit this form will increase the chance that you are audited or denied the benefit of the ETIC. This will begin a long process of paperwork and trouble that can be avoided if the form is simply submitted right away with the initial tax return.
TurboTax and other tax software will also easily compute and file a return for you to claim your EITC in 2013. This is probably the best route for most taxpayers. More information can be found in the TurboTax earned income tax credit section.
Don’t delay and claim your EITC today.