Sunday, February 15, 2015

Childless adults can qualify for earned income credit

Susan Tampor for the Sun Herald writes: The Earned Income Tax Credit can put real money into the pockets of working people. Yet each year, some of that much-needed money is left on the table.
With almost 28 million people receiving $66 billion for the credit last year, it is hard to believe anyone would not know about a key tool that fights poverty.
Kathleen Hatke Aro, president of the Accounting Aid Society in Detroit, said she's unsure why millions of dollars still goes unclaimed.
"Quite frankly, I think a lot of people who don't claim it are single," said Aro.
Over the years, many associated the credit with working families. But a smaller credit for people without children is available and can be worth up to $496 for 2014 tax returns.
By contrast, this tax season, the federal credit can be worth up to $6,143 for those with three or more qualifying children.
Elaine Maag, senior research associate for the Urban Institute and the Tax Policy Center, said the overall take-rate for the earned income credit can be fairly high, around 86 percent based on some research. But those who do not have children are often not applying for the credit that they'd deserve, she said.
If you do not have a qualifying child, you must be age 25 but under 65 at the end of the tax year, live in the U.S. for more than half the year and not qualify as a dependent of another person.
The credit for those without children is available only to those with very limited incomes. For 2014, the income limit is $14,590 for singles and $20,020 married filing jointly, if no qualifying children are involved.
The nature of a refundable credit could add to the confusion. A refundable credit means workers may get money back, even if they have no tax withheld.
Marshall Hunt, director of tax policy for the Accounting Aid Society's tax assistance program, said some people might not apply for the EITC because they received a W-2 but didn't have any taxes withheld and they are not required to file taxes because their incomes are so low. They do not realize how valuable a refundable credit can be.
"If you have earned income, I would check it out," Hunt said.
The refundable credit is designed to reward those who work hard to make ends meet.
Someone who earned $52,427 or less in 2014 might be able to qualify for some money. The IRS website -- www.irs.gov -- has an "EITC Assistant" to run some numbers online.
The amount of the credit varies widely. But if someone misses out on just a few hundred dollars, they're missing some money that could ease their financial struggle.

Read more here: http://www.sunherald.com/2015/02/14/6071269/susan-tompor-childless-adults.html#storylink=cp
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