Earned Income Tax Credit/Child Tax Credit
The Earned Income Tax Credit or the EITC is a refundable federal income tax credit for low to moderate income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.
To qualify for Earned Income Tax Credit or EITC or simply called EIC, you must have earned income from employment, self-employment or another source and meet certain rules. In addition, you must either meet the additional rules for Workers without a Qualifying Child or have a child that meets all the Qualifying Child Rules for you. Tax payers must meet certain requirements and file a tax return, even if they do not have a filing requirement.
For more information including help in determining whether individuals and their families qualify, go to www.irs.gov/publications. Please consult this website before you file your taxes. It is estimated that 25 percent of all eligible individuals do not take advantage of this program.
The Child Tax Credit is a credit that may reduce your tax by as much as $1,000 for each of your qualifying children. The Additional Child Tax Credit is a credit that you may be able to take if you are not able to claim the full amount of the Child Tax Credit. You may not qualify for the Child Tax Credit, but qualify for the Additional Child Tax Credit.