Eligible for the earned income credit?

The Internal Revenue Service and partners nationwide mark the fifth annual Earned Income Tax Credit Awareness Day on Friday, Jan. 28. The initiative highlights the availability of one of the federal government’s largest benefit programs for working families and individuals.

The American Recovery and Reinvestment Act of 2009 created a new category of families with three or more children and increased the maximum benefit of EITC for tax years 2009 and 2010. The Tax Relief and Job Creation Act of 2010 extended these changes through 2012.

The maximum credit for 2010 tax returns is $5,666 for workers with three or more qualifying children. However, workers without qualifying children may also be eligible for a smaller credit amount.

“Millions of workers who did not earn high incomes claimed the EITC last year,” said Doug Shulman, IRS commissioner. “The IRS encourages all eligible taxpayers to claim this valuable credit. Together with our partners, we can help taxpayers file their returns and get the EITC.”

Workers who earned $48,362 or less from wages, self-employment or farm income last year could receive larger refunds if they qualify for the EITC. Four out of five eligible taxpayers claimed the EITC last year, representing a critical financial boost to over 26 million workers who earn low to moderate incomes.

In Virginia, over 592,000 workers claimed over $1.2 billion dollars with an average credit amount of $2,106.

Eligibility for the EITC is determined based on a number of factors including earnings, filing status and eligible children. Many people who experienced a change in these factors will qualify for the first time this year and may not be aware of the credit.

Taxpayers must file a tax return, even if they do not have a filing requirement, and specifically claim the credit. Those who typically fail to claim the EITC include rural workers and their families; non-traditional families, such as grandparents or foster parents raising children; taxpayers without qualifying children; individuals with limited English proficiency; Native Americans; and taxpayers with disabilities.

It is easy to verify eligibility for EITC by going to www.IRS.gov and typing “EITC” into the search box. There is an online EITC Assistant, which can help taxpayers determine eligibility by answering a few simple questions.

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