Earned Income Tax Credit Awareness
The Internal Revenue Service (IRS) opened the 2014 tax filing season for individuals on January 31. Concurrent with that, the IRS designated January 31 as Earned Income Tax Credit (EITC) Awareness Day, an outreach campaign to ensure that millions of low- and moderate-income workers get the credit to which they are entitled.
The EITC is "a key work incentive for individuals and families who earned $51,567 or less in 2013", according to an IRS news release. It is estimated that four out of five eligible workers and families receive the credit, but millions miss it every year because they do not claim it when filing or do not file a tax return at all.
For tax year 2012, over 27 million eligible workers and families received more than $63 billion in EITC, with an average EITC amount of $2,300. However, an estimated 20 percent of individuals who are eligible for the EITC do not claim it.
The EITC changes depending on income, family size and filing status. An interactive EITC Assistant, found at www.irs.gov/eitc, has been upgraded by the IRS to help taxpayers. The website can help people determine eligibility and calculate their estimated EITC refund.
One thing you may not know is that you must file a tax return to obtain the EITC even if you are not otherwise required to file.
While that may be a burden on some, and perhaps the most common reason so many do not get the benefits available to them, it nevertheless is a necessary tool in attempts to minimize and prevent EITC fraud.
Common errors, according to IRS data, that are made when claiming the EITC include claiming a child who does not meet the relationship, age, or residency tests; filing as single or head-of-household when married; omitting Social Security numbers or mismatching the numbers with names; and overreporting or underreporting income or expenses in order to qualify for or increase the EITC.
You also need to be aware of scams that claim to increase the EITC refund.
The IRS website has been enhanced to help you with EITC and other tax return filing issues. Features have been added with answers to tax questions, information on tax benefits and checking the status of refunds after the returns are filed.
The IRS has made online tools available to help individuals determine whether you qualify for the EITC and has more than 100 instructional videos and other resources on various social media platforms.
Some of these tools are:
The VITA Locator Tool. You can use this online tool to find one of the 13,000 Volunteer Income Tax Assistance (VITA) locations spread across the United States and to see if you qualify to use VITA. At these locations, volunteers certified by the IRS to prepare federal and state tax returns will provide free tax return preparation assistance.
IRS Free-File forum. An estimated 100-million Americans potentially qualify to choose and download one of several free IRS-affiliated tax return preparation software programs.
Where's My Refund? Taxpayers who have filed their returns can use this tool to check on the status of their tax refund.
In spite of budget cuts and "limited resources" at its disposal, the IRS says it is working diligently to ensure the 2014 filing season will proceed smoothly.
"We're confident that the tax season will go well," IRS Commissioner John Koskinen said recently. "The IRS is really focused on how to make it easy for taxpayers to figure out what they owe and how to pay."
