About the Earned Income Tax Credit

CLEARFIELD – Working families struggling to get by from paycheck to paycheck can benefit from the Earned Income Tax Credit. Millions of workers qualify for the EITC, a special tax benefit for people who work full-time or part-time. For the 2004 tax year, the Brookings Institution estimates, Pennsylvania residents qualified for more than $256 million in Earned Income Credit that went unclaimed.

The EITC is a special tax benefit for working people who earn low or moderate incomes. Families that meet eligibility requirements qualify for the EITC which helps reduce their taxes and increase their income. Families qualified for the EITC and filing a federal tax return can get back some or all of the federal tax withheld from their pay during the year. They may also get some cash back from the IRS. Even taxpayers, who didn’t earn enough to owe an income tax, may qualify for EITC.

Individuals who worked full-time or part-time at some point in 2007, can qualify for the EITC depending on their family structure and income which must fall below the following income guidelines:

Family size: Single; Married filing jointly; Maximum EITC
Two or more children: $37,783; $39,783;
One child: $33,241; $35,241; $2,853
No children: $12,590; $14,590; $428
Source: Internal Revenue Service

How do you get the EITC?
• Workers raising a qualifying child in 2007 must file either Form 1040 or 1040A and must fill out and attach Schedule EITC.
• Workers who didn’t raise a qualifying child in their home in 2007 can file any tax form – including the 1040EZ.
• Workers raising children can get part of their EITC in their paychecks throughout the year unless they are self-employed. The rest will come back as a check from the IRS after the worker files a tax return. This is called the Advance EITC payment option. During 2007, workers who provided their employer with a completed W-5 form could have received up to $1,700 throughout the year with their paychecks as part of the Advanced Earned Income Tax Credit. With over $30 extra each week they could have bought groceries, put gas in their car, paid utilities and maybe even saved for a rainy day!
Low income families are often pleasantly surprised to learn that the money they receive as EITC doesn’t count as income in determining their eligibility for benefits like Temporary Aid to Needy Families (TANF), Medicaid, food stamps, the Women, Infants and Children (WIC) program, supplemental social security (SSI), or public or subsidized housing. Thus EITC provides a hand up out of poverty – not a handout. It rewards families who are in the workforce.

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