The Internal Revenue Service launched a campaign to remind taxpayers about the earned income credit that may be available to eligible taxpayers.
The $5,891 credit that is advertised is available to taxpayers who file as "married filing jointly" and "head of household."
The taxpayer's adjusted gross income must be less than $45,060 (HOH) or $50,270 (MFJ). The taxpayer has three or more qualifying children.
The $5,891 is the maximum earned income credit. If you have three qualifying children and your income is $13,000-$22,300, you would receive the maximum of earned income credit. Once you go below or over the above amounts, the earned income credit is reduced. Again, you must have three qualifying children.
This credit is not automatic. Income that is not earned, such as unemployment, Social Security, pensions and other types of income, will not qualify for this credit.
If you have two children and your adjusted gross income is less than $41,952 (HOH) or $47,162 (MFJ) you would be eligible for up to $5,236.
To receive the maximum amount, your income would need to be $13,050-$17,100.
If you have one child your adjusted gross income must be less than $36,920 (HOH) or $42.130 (MFJ). The maximum credit is $3,169. To receive the maximum amount, your income needs to be $9,300-$17,100. If you make less than $9,300 and more than $17,100, the credit is reduced.
If you do not have children, in order to get any credit, your income can not be more than $13,950. The maximum credit for no children is $475.
Earned income credit is on a curved scale, meaning that once you fall below the beginning limit and above the top limit for the maximum credit, the credit is reduced.
Another myth is that everyone qualifies for this credit.
The taxpayer must be at least 25 years old and younger than 65. The taxpayer cannot be a dependent or qualifying child of another person. The taxpayer must have lived in the United States for more than half the year. The qualifying child must have a Social Security number and be a U.S. citizen or resident alien all year.
Also, the taxpayer cannot have foreign earned income. The investment income must be less than $3,000, and the taxpayer cannot have a felony conviction. In addition, if you file married filing separately, the credit is not available.
For more information about the earned income credit, visit the IRS website at irs.gov and type in Earned Income Credit in the search box.
Tracy Bunner is an enrolled agent and tax preparer with an office in Harrisville. She can be reached at 801-686-1995 or at firstname.lastname@example.org.