Tax benefit for qualifying lower-income workers

Do you struggle to get by from paycheck to paycheck? Then you should know about the Earned Income Tax Credit (EITC), a special tax benefit for people who work full-time or part-time. Millions of low-wage taxpayers qualify. Even if you aren't a U.S. citizen, you may still qualify for the EITC.

More than 76,500 New Hampshire residents collectively received $137.7 million in EITC in 2009. The average EITC for State of New Hampshire residents for 2009 was $1,796.

What is Earned Income Credit?

The EITC is a special tax benefit for working people who earn low or moderate incomes. If you fall into this category, the EITC can help reduce your taxes and increase your income.

If you qualify for EITC and file a federal tax return, you can get back some or all of the federal tax withheld from your pay during the year. You may also get some cash back from the IRS. Even if you didn't earn enough to pay an income tax, you may qualify for EITC.

Who can get EITC?

If you worked full-time or part-time at some point in 2010, you can qualify for the EITC depending on your family income which must fall below the following income guidelines:

Family size	Single	Married filing jointly
Three or more children	$43,362	$48,362
Two children	$40,373	$45,373
One child	$35,545	$40,545
No children	$13,470	$18,470

Source: Internal Revenue Service

How much is it worth?

The chart below shows the maximum EITC a family can earn. Your family income determines the actual amount of EITC you receive.

Family size	Maximum EITC
Three or more children	$5,666
Two children	$5,368
One child	$3,050
No children	$457

Source: Internal Revenue Service

The IRS considers a qualifying child: (1) Any child who lived in your household for more than half of 2010, and (2) is your son, daughter, adopted child, grandchild, great-grandchild, stepchild, or eligible foster child, and (3) who also meets one of the following criteria:

• Was younger than age 19 at the end of the tax year
• Was a full-time student under age 24, or
• Was permanently and totally disabled at any age during the year

How do you get the EITC?

Workers raising a qualifying child in 2010 must file either Form 1040 or 1040A and must attach Schedule EIC. Workers with children can't get the EITC if they file Form 1040EZ or do not attach Schedule EIC. Married workers must file a joint return to get the EITC.

Workers who didn't raise a qualifying child in their home in 2010 can file any tax form, including the 1040EZ. These workers write EITC (or dollar amount of their credit) on the Earned Income Credit line on the tax form. They don't file Schedule EIC.

You must provide a correct name and Social Security number for every person listed on the tax return and Schedule EIC. If this information is incorrect or missing, the IRS will delay the refund.

Free help filing your tax forms

Many families who apply for EITC pay someone to complete their tax forms. Many families who apply for EITC pay someone $55 to $200--or sometimes much more--to complete their tax forms. Getting a quick tax refund may cost you even more.

Low or moderate income workers can get free help with tax preparation through local offices throughout New Hampshire. The IRS certifies volunteers to provide free tax help at sites throughout New Hampshire. Find out where the closest free tax preparation site by calling 2-1-1 or visiting the NH Earned Income Tax Credit online.

Does the EITC affect eligibility for other public benefits?

No. The money you receive as EITC doesn't count as income in determining your eligibility for benefits like Temporary Aid to Needy Families (TANF), Medicaid, SNAP food benefits (formerly called food stamps), the Women, Infants and Children (WIC) program, Supplemental Social Security (SSI), or public or subsidized housing.

For more information:

• Earned Income Tax Credit for 2010Cooperative Extension EITC brochure for New Hampshire residents
NH Earned Income Tax Credit (information for New Hampshire residents)
• IRS Earned Income Tax Credit Questions & Answers
• IRS Frequently Asked Questions about “Qualifying Child” rules
• Information en espanol: Crédito por Ingreso del Trabajo(EITC)
• New Hampshire IRS offices
• IRS tool for estimating how much EITC you will get for 2010