Tax almost seems to be a burden for many people who struggle in their life for financial stability. Earned Income Tax Credit is almost a boon to the moderate and low income families. As the name suggests this earns people extra money into their pockets.
The credit rate varies with each person based on his income level and the number of dependants the person has. The person must also have a qualifying child for getting this benefit.
Know whether you qualify for earned income tax credit:
- A qualifying child is required.
- As this is the practice in US the person must be an American citizen.
- Person should have a social security number.
- Person should have a monthly income and not be a small business man.
- Should not be a dependant for another person.
- Should not be a qualifying child of some other person.
- If the person does not have a qualifying child then his age should be within 25 to 64 years.
This policy is framed by the American federal government in order to reduce the poverty rates in the country. This also has a basic that a parent who is in the poverty line should not grow up the child in the same poverty line. The generation should be well settled. In this aspect this policy is been framed.
How to claim the Earned Income Tax Credit?
In order to claim such benefits an application should be sent to the IRS which will go through the facts and will approve or reject the claiming. It also has rights to reduce the percent of credit a person gets based on his furnished information.
But when a person is denied the credit in one year by the IRS, still he can claim the benefit the next year. In order to do this he should file by filling the form number 8862. All the required documents should be attached along with this in order to qualify for this.
When a person knows that he qualifies for the Earned Income Tax Credit then he can easily calculate his credit. He can read the line number 64 on the form 1040 or line 38a on form number 1040A.