Federal and State Earned Income Tax Credits (EITC)

Categories :: Other Legal Issues > Taxes

If your earned income (income from a job) falls below certain levels, you may qualify for a reduction in taxes and possibly a refund. Federal, Maryland and Montgomery County tax programs offer "earned income credits".

What is the Earned Income Credit Program?

It is a special program for low and moderate-income persons who have been employed in the last tax year. The program is administered by the Internal Revenue Service (IRS) and is a major anti-poverty initiative. It can reduce your federal taxes (possibly to zero). You may qualify for extra cash back from the IRS - a refund of more than you actually paid in taxes. Even if your earnings are so low that you did not pay taxes, you may be able to get a payment.

Who is eligible and how much might I get?

Generally, you may be eligible if you worked full or part-time and:

  • you must have a valid social security number
  • you have no children and your household income was less than $13,460 (or $18,470 for married workers) during the year;
  • have one child and your household income was less than $36,052 (or $41,132 for married workers); or
  • have two children and your household income was less than $$40,964 (or $46,044 for married workers).
  • have three or me children and your household income was less than $43,998 (or $49,078 for married workers).
  • if you are married, you must file jointly.
  • your investment income must be less than $3,100 a year
  • if you do not have a qualifying child, you must be between 25 and 65 and not be the dependent of another person

For an easy-to-understand set of questions and answers to help you decide if you are eligible, look at the IRS website. You can find the complete information in IRS publication 596.

How do I get a federal Earned Income Credit?

Workers raising children must file either Form 1040 or 1040a and must fill out and attach Schedule EIC.  Workers with children cannot get the EIC if they file form 1040EZ or fail to attach Schedule EIC.  Married workers must file a joint return to get the EIC.

  • Workers who were not raising children can file a tax form - including the 1040EZ.  These workers write "EIC" (or the dollar amount of their credit) on the earned Income Credit line on the tax form.  They do not file Schedule EIC.
  • A correct name and Social Security number must be provided for every person listed on the tax return and Schedule EIC.  If this information is incorrect or missing, the IRS will delay the refund.
  • You must have a Social Security number for yourself, your spouse, and your child(ren).
  • Workers don't have to calculate their own EIC. You choose, the IRS will do it for you.

Combat Pay - You can now choose to have your non taxable combat pay included as earned income for earned income credit.

Worker raising children can get the EIC in their paychecks - Even if your earned income is so low you are not required to file a tax return, you will need to file a return to get your EIC refund. The minimum income threshold for filing a tax return for the year depends on your income, age and marital status.  Workers who are raising children can get part of their EIC in their paychecks throughout the year and part in a check from the IRS after they file their tax return.  This is called the Advance EIC payment option.

Does Maryland offer a state Earned Income Tax Credit?

If you qualify for the federal earned income tax credit and claim it on your federal return, you may be entitled to a Maryland earned income tax credit on the state return equal to 50 percent of the federal tax credit.

Does the EIC affect welfare benefits?

In most cases, the EIC does not affect eligibility for benefits like cash assistance ("welfare"), Medicaid, food stamps, SSI, or public or subsidized housing.

Can immigrant workers get the EIC?

Many legal immigrants can qualify for the EIC, as long as they meet the eligibility requirements.

How do I get the Advance Earned Income Credit?

The Education Jobs and Medicaid Assistance Act of 2010 signed into law August 10, 2010 repealed the Advance EITC. After December 31, 2010, workers can not receive Advance EITC in their paychecks.

What is the federal Child Tax Credit?

The Child Tax Credit (CTC) is a federal tax benefit worth up to $1,000 for each dependent child under 17. The child tax credit is refundable, which means that you might be eligible to receive a refund even if you owe no income tax. The CTC is in addition to the Earned Income Credit and has different rules to qualify. Learn more about the Child Tax Credit.

Who is eligible for the federal additional Child Tax Credit, and how do I file for it?

The Child Tax Credit is refundable, which means that even the credit can be claimed as a refund if the amount of the credit exceeds the tax owed by the taxpayer. In order to claim the credit, the CTC requires a separate form - Form 8812.

What’s New for 2011

After 2010, you can no longer get advance payments of the credit in your pay during the year as you could in 2010 and earlier years.

Is this legal advice?

This site offers legal information, not legal advice.  We make every effort to ensure the accuracy of the information and to clearly explain your options.  However we do not provide legal advice - the application of the law to your individual circumstances. For legal advice, you should consult an attorney.  The Maryland State Law Library, a court-related agency of the Maryland Judiciary, sponsors this site.  In the absence of file-specific attribution or copyright, the Maryland State Law Library may hold the copyright to parts of this website. You are free to copy the information for your own use or for other non-commercial purposes with the following language “Source: Maryland's People’s Law Library – www.peoples-law.org. © Maryland State Law Library, 2014.”

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