Earned Income Tax Credit
A common sentiment on these forums is low regional pay. I do not have the solution to that, but I'd like to alert you to the Internal Revenue Service's Earned Income Tax Credit (EITC). For reasons I do not understand, it's not used very much by tax preparers or taxpayers. As with any government program, this has its own hoops and obstacle course, the primary one of which is EITC Thresholds. Hope this helps some of you. It's burdensome, but try filling out the forms for farmers! They are nearly incomprehensible and I don't look forward to them.
You must meet the following EITC requirements:
Must have a valid Social Security Number
You must have earned income from employment or from self-employment.
Your filing status cannot be married, filing separately.
You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
You cannot be a qualifying child of another person.
If you do not have a qualifying child, you must:
be age 25 but under 65 at the end of the year,
live in the United States for more than half the year, and
not qualify as a dependent of another person
Cannot file Form 2555 or 2555-EZ (related to foreign earn income)
Current Tax Year 2006Earned income and adjusted gross income (AGI) must each be less than:
$36,348 ($38,348 married filing jointly) with two or more qualifying children;
$32,001 ($34,001 married filing jointly) with one qualifying child;
$12,120 ($14,120 married filing jointly) with no qualifying children.
Tax Year 2006 maximum credit:
$4,536 with two or more qualifying children;
$2,747 with one qualifying child;
$412 with no qualifying children.
Investment income must be $2,800 or less for the year.
The maximum Advance Earned Income Tax Credit (AEITC) for TY 2006 the employer is allowed to provide throughout the year with the employee's pay is $1,648.
A “Qualifying Child” - A “qualifying child” may enable a taxpayer to claim several tax benefits, such as head of household filing status, the exemption for a dependent, the child tax credit, the child and dependent care credit, and the earned income tax credit. Prior to 2005, each of these items defined a qualifying child differently.
Next Tax Year 2007Earned income and adjusted gross income (AGI) must each be less than:
$37,783 ($39,783 married filing jointly) with two or more qualifying children;
$33,241 ($35,241 married filing jointly) with one qualifying child;
$12,590 ($14,590 married filing jointly) with no qualifying children.
Tax Year 2007 maximum credit:
$4,716 with two or more qualifying children;
$2,853 with one qualifying child;
$428 with no qualifying children.
Investment income must be $2,900 or less for the year.
The maximum Advance Earned Income Tax Credit (AEITC) for TY 2007 the employer is allowed to provide throughout the year with the employee's pay is $1,712.