Earned Income Credit Qualifications Steps Can Be Confusing To Families
Earned Income Credit technicalities are what make the credit so difficult for regular taxpayers to understand. There are some ways to free file online that will ask you a few questions about your circumstances, but even these services can get it wrong. Filing the wrong information to the IRS can cause tax debt, penalties and even IRS audits. On the other hand, getting the Earned Income Credit correct can save families thousands of dollars or allow for very large refunds that can help pay off credit card debt or help with home repairs (which can create further tax credits the next year).
One Earned Income credit qualification is knowing if the child or dependent being claimed counts towards the credit. There are four criteria that determine if a dependent is qualified. Age, Relationship, Residency and Joint Return are the four qualifications. If the child is under the age of 19 and also younger than the filer (and his spouse) the child will qualify. If the child is under 24 and enrolled full-time as a student, he/she will also qualify. The dependent must also be a son/daughter or eligible foster child or descendant (like a grandchild), or they must be a brother/sister, half-brother/sister or step brother/sister. Just for clarification, adopted children are always considered your own child on an income tax return.
Another factor in the Earned Income credit is your income level and filing status. As your income level goes up, no matter the filing status, your chances of qualifying for the Earned Income credit go down. On the other hand, as the number of qualifying dependents goes up, no matter the income level, your chances increase. A person who is single with no children must have an earned income level below $14,340 in 2014 to qualify for the Earned Income credit. On the other hand, a person with three or more qualifying children can earn $46,227 before they are unable to take the Earned Income credit.
The Earned Income credit is definitely geared towards families. If you are interested in more information about how the Earned Income credit can help you and your family, contact us today for more information. Our tax preparation department may be able to help you save money on this year’s taxes with or without the Earned Income credit. Get answers to your tax questions.