What is the Earned Income Credit?
The Earned Income Credit is a government installed program to help those who work, yet are in a low to moderate income class. Like other credits, this one reduces the taxes owed by qualifying citizens. It is based on the concept of Earned Income, which is anything earned by working for an employer, running a farm or a business.
The income must be taxable and comes from categories such as combat pay, union strike benefits, net earnings from self-employment, wages, salaries and tips and some disability benefits that have been received before the minimum age of retirement. Some of the income sources, such as combat pay, can have complicated restrictions and for that reason, you should hire a tax professional to navigate the application process for you.
If you don’t, you could miss out on some of the credit money available to you. If you choose to take this task on yourself, you have to fill out the Earned Income Credit Worksheet. To simplify this process, you can hire a tax professional that is familiar with these forms. The only other option for obtaining for the Earned Income Credit is to have the IRS figure it out for you. The EIC credit goes on Form 1040, Form 1040 A or Form 1040 EZ