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IRS Patrol: The IRS Wants You To Know More About the Earned Income Tax Credit – EITC Awareness Day Declared
[Stacie says: If you are claiming this credit for yourself or for a client, be sure to complete the necessary documentation. Plus, free help is available for people who qualify – read on to learn more]
EITC Video: English | ASL
EITC Audio Files for Podcast: English | Spanish
WASHINGTON — An expanded Earned Income Tax Credit (EITC) means larger families will qualify for a larger credit, offering greater relief for people who struggled through difficult financial times last year, the Internal Revenue Service said today.
The IRS and the Treasury Department marked EITC Awareness Day [January 29] as their partners nationwide worked to highlight the availability of this important tax credit. EITC, which is in its thirty-fifth year, is one of the federal government’s largest benefit programs for working families and individuals. Last year, nearly 24 million people received $50 Billion in benefits. The average credit was more than $2,000.
“As part of the economic recovery efforts, there have been important changes to expand EITC to benefit taxpayers,” said IRS Commissioner Doug Shulman. “Today, more than ever, hard-working individuals and families can use a little extra help. EITC can make the lives of working people a little easier.”
Eligibility for EITC depends on earned income and family size, among other tests. However, single people and childless workers also are eligible, although for smaller amounts. For tax years 2009 and 2010, the American Recovery and Reinvestment Act created a new category for families with three or more children and expanded the maximum benefit for this category.
To qualify for the EITC, earned income and adjusted gross income (AGI) for individuals must each be less than:
- $43,279 ($48,279 married filing jointly) with three or more qualifying children
- $40,295 ($45,295 married filing jointly) with two qualifying children
- $35,463 ($40,463 married filing jointly) with one qualifying child
- $13,440 ($18,440 married filing jointly) with no qualifying children
The maximum credit for tax year 2009 is:
- $5,657 with three or more qualifying children
- $5,028 with two qualifying children
- $3,043 with one qualifying child
- $457 with no qualifying children
The maximum amount of investment income is $3,100 for tax year 2009. For families, there are also certain requirements for child residency and relationship that must be met. Additional eligibility information is available in FS-2010-11 and on the Web at IRS.gov/EITC.
Another new provision adds to the definition of a “qualifying child:” The child must be younger than the person claiming the child unless the child is totally and permanently disabled any time during the year. The child cannot have filed a joint return other than to claim a refund. Also new for 2009, if a qualifying child can be claimed by either a parent or another person, the other person must have an AGI higher than the parent in order to claim the child for EITC purposes.
Historically, one in four eligible taxpayers fails to claim the EITC, which is why the IRS and its free tax preparation partners host an annual EITC Awareness Day. This year, there are 68 news conferences being held around the country. Community coalitions and IRS partners nationwide also are also issuing 128 news releases, writing letters to the editor and using social media tools to spread the word about EITC.
Typically, people who fail to claim the EITC include workers without qualifying children, people whose earned income falls below the threshold required to file a tax return, farmers, rural residents, people with disabilities and nontraditional families such as grandparents raising grandchildren. People must file a tax return to claim the EITC.
Free help is available to EITC-eligible taxpayers. There are nearly 12,000 free tax preparation sites nationwide. People who want to prepare their own tax returns can visit Free File on IRS.gov. This free tax software and free electronic filing program will walk taxpayers through a question and answer format and help them claim the tax credits and deductions for which they are eligible.
EITC-eligible taxpayers also can seek assistance at the 400 IRS Taxpayer Assistance Centers nationwide. To assist EITC taxpayers, 167 IRS assistance centers will offer Saturday service on Jan. 30, Feb. 6 and Feb. 20.
There is an online EITC Assistant also available on IRS.gov which can help taxpayers and tax preparers determine eligibility. And, for tax preparers and IRS partners, there is EITC Central which has links to toolkits that include marketing products.
More than 65 percent of EITC returns are prepared by a third party. The IRS urges taxpayers to choose a reputable tax preparer to avoid problems that come with an inaccurate tax return. The agency also urges tax preparers to follow due diligence requirements when preparing an EITC tax return. More information is available at irs.gov/eitc.
IRS Patrol: Free File Now Available to Almost All Taxpayers; Software Can Help Find New Economic Recovery Tax Breaks that Could Be Overlooked
Videos:
E-File Director’s Message: English | Spanish
Free File and Fillable Forms: English | Spanish | ASL
First Time Filing a Tax Return?: English
For these and other videos: YouTube/IRSVideos
Audio:
Audio File for Podcast:English |Spanish
WASHINGTON — The Internal Revenue Service and its private-sector partners are making Free File available starting today. Most taxpayers can have free use of helpful tax preparation software and free electronic filing of the federal tax returns.
There are many new tax breaks this filing season and Free File software can make it easier for people to find all the credits and deductions they are due. Taxpayers must go through www.IRS.gov homepage or www.IRS.gov/freefile to access the free options.
“If cost is a barrier or if you’re wondering about free options, check out IRS.gov for Free File options. There’s something there for almost everybody,” said David R. Williams, director, Electronic Tax Administration and Refundable Credits. “Free File is a great choice for either the novice taxpayers who need some assistance or the experienced taxpayers who prefer to do the work themselves. It’s fast; it’s safe; it’s free.”
The Free File program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the Internal Revenue Service (IRS) and the Free File Alliance LLC, a group of approximately 20 private sector tax software companies.
Free File comes in two formats: Traditional Free File, which is available to taxpayers who meet specific criteria and Free File Fillable Forms, which is available to almost all taxpayers.
Approximately 70 percent of the nation’s taxpayers, some 98 million people who meet the $57,000 income limit, are eligible for the user-friendly Traditional Free File. Traditional Free File provides step-by-step software help that asks simple questions and puts the answers on the correct tax forms.
Traditional Free File can help taxpayers identify new tax credits or deductions under the American Recovery and Reinvestment Act for which they may be eligible. There are many new and expanded benefits for energy conservation, new car purchases, college tuition and first-time homebuyers.
Taxpayers must go through IRS.gov to access Free File. Each company sets its own eligibility criteria. For example, generally, eligibility criteria are based on state residency, age, income or military service. However, an individual or family with income of $57,000 will find tax preparation software they can use.
Taxpayers either can read over the company offers by clicking “I Will Choose a Company” or get a little help in making the selection by clicking “Help Me Find a Company.” With a little information, the tool will display those company offers for which taxpayers may be eligible.
Several companies offer their software in Spanish. Several also offer state tax preparation, although fees may apply. Taxpayers are under no obligation to make any purchases from the software companies.
For taxpayers who are comfortable preparing their own tax returns, there’s Free File Fillable Forms. Almost everyone is eligible for this service. There are no income limits and almost all tax forms are available.
This service provides electronic versions of IRS paper forms. Taxpayers can complete the tax forms online and file electronically. The fillable forms perform simple math functions, but do not use the question-and-answer software format. Free File Fillable Forms does not support state forms or state electronic filing.
Both Free File versions are highly popular among users. According to a recent survey, 98 percent of Traditional Free File users and 96 percent of Free File Fillable Forms users polled said they would recommend the Free File products to family and friends.
Taxpayers who use Traditional Free File or Free File Fillable Forms can enjoy all the benefits of IRS e-file – also for free.
By using the free e-file option, taxpayers also get the benefits of a fast refund, reduced error rate and a quick acknowledgement. By using e-file and direct deposit, taxpayers can get a refund in as few as 10 days. If people owe taxes, they also can control their payments and set a date such as April 15 for electronic payment. The error rate for an e-filed return is 1 percent, compared to 20 percent for a paper return. Unlike paper filers, e-filing taxpayers also will receive an acknowledgement that the IRS has received and accepted or rejected their returns.
Taxpayers who are eligible for the $8,000 or the $6,500 first-time homebuyer credit will not be able to e-file because they must attach proof of purchase to their tax return. However, these taxpayers still can use Free File to prepare their tax forms and then print and mail the returns to the IRS.
Free File is available 24-hours a day through April 15. For taxpayers who request an extension to file their federal returns, Free File will be available through October 15.
People who are interested in reviewing more information about Free File can visit www.freefile.IRS.gov. Videos on these topics also are available at www.youtube.com/irsvideos.
Stacie's Tax Stuff 