The Earned Income Tax Credit can add a total of up to $6,044 to your tax refund!
Being a single parent is no picnic. Parenthood is a tough gig, especially when you’re on your own.
Raising a family on one source of income is enough of a headache. On top of that, you have dinner to cook, homework to help with, and sports games to attend. It’s clear, you have a lot on your plate and could use more money in your pocket.
Here’s something you must know: to lessen the financial burden of being a single parent, the IRS offers the Earned Income Tax Credit to qualifying tax filers.
Why Your Income Matters
The EITC or EIC is a refundable tax credit that is only offered to taxpayers who earn low-to-moderate income from their job or from being self-employed. That means if you don’t work, you cannot claim the credit.
In addition, once your income goes over a certain threshold, you won’t qualify to receive the tax credit.
As a single or head of household filer, the wages earned from your job, or the profits made from self-employment, cannot exceed:
- $46,997: 3 or more qualifying children
- $43,756: 2 qualifying children
- $38,511: 1 qualifying child
- $14,590: no qualifying children
If you received investment income in 2014, you can still claim the credit but the total amount earned from your investment cannot exceed $3,350.
What You’ll Receive
It’s simple: the more qualifying children you have, the more you get.
Here’s how much you can expect to receive from the EIC:
- $6,143: 3 or more qualifying children
- $5,460: 2 qualifying children
- $3,305: 1 qualifying child
- $496: no qualifying children
How to Determine if Your Child Qualifies
A child qualifies if she or he meets the tests for relationship, age, and residency as follow:
- Relationship: either your son, daughter, foster child, adopted child, stepchild, brother, sister, half brother or sister or even step sibling
- Age: 18 year of age or younger, or 23 years or younger and a full-time student (any age if he/she is permanently disabled)
- Residency: the child must live with you (in the US) for more than half the year
In addition to meeting the criteria above, your child can not file a joint return if they are married (unless they were filing to receive a refund).
Other tips to keep in mind when filing
If you’re ready to take advantage of this tax credit, you can create an account on RapidTax and start your 2014 tax return.
While entering your tax information, be sure to enter the correct income you earned and remember to double check your social security number and those of your dependents. It’s also very important to spell their names correctly. Misreporting information will raise a red flag to the IRS and cause delays in your refund.
If you need help or have questions while reporting your tax information, the RapidTax team is a phone call away. Photo via Cia de Foto on FlickrThursday, March 26th, 2015 at 10:37 am and is filed under Tax and Life Changes | Blog, Tax Deductions and Credits | Blog.