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Earned Income Tax Credit: One in five miss out on average $2,400 EITC - Milwaukee Personal Finance

The average Earned Income Tax Credit (EITC) adds $2,400 to a tax refund, yet the IRS estimates only four out of five workers claim the credit they are eligible for. In response to this, the IRS offers easy-to-use help for determining eligibility for the EITC and for claiming the credit. If your income for 2014 was less than $52,427 and you have qualifying children, you may be able to claim a tax refund worth up to $6,143. Even if you have no qualifying children, you could still be eligible for a credit worth up to $496.

Use the EITC Assistant

EITC eligibility varies by income, family size and filing status and determining eligibility can be complex. Find out if you can take the EITC by using the EITC Assistant online tool from the IRS. The EITC Assistant is available in both English and Spanish and will help you find your filing status, find out if you have a qualifying child or children and will verify if you are eligible for EITC. If the EITC Assistant determines that you can take this tax credit, it will give you an estimate the amount you can expect.

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Qualifications for claiming EITC

Anyone who qualifies for the EITC for tax year 2014 must meet these conditions:

Have a valid Social Security number and be a U.S. citizen or resident alien for the entire year.

Have earned income through regular employment or self employment.

Have no more than $3,350 investment income for the year.

Not be a qualifying child of another person claiming EITC.

Must not file as "married filing separate".

Must not file Form 2555 or Form 2555-EZ for Foreign Earned Income.

If you have no children, you (and spouse if filing a join return) will also need to meet these conditions:

Must have lived in the United States for six months or more in 2014.

Must be between 25 and 65 years old.

Cannot be claimed as a dependent on another person's tax return.

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If you have children, these conditions must be met:

Must be your son or daughter, natural or who is adopted child or child placed for adoption, a stepchild or an authorized foster child.

Your brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of them (such as a niece or nephew).

At the end of 2014, the child must have been younger than 19 and younger than the person claiming EITC, or younger than 24 and a full time student.

And exception to the age requirement is made for permanently and totally disabled children who can be any age.

Child must live for six months out of the year with the person claiming EITC or the spouse of this person if a joint return is being filed. Special rules apply for Military members on extended duty outside of the United States.

The child can not have filed a joint return, unless the child and the child's spouse did not have a filing requirement and filed only to claim a refund.

Getting help with EITC

To get help with determining your eligibility for EITC, use the EITC Assistant mentioned earlier. From there, you can use IRS Free File tax software to be guided through claiming the EITC and to complete and file your entire tax return for free.

Another good option is to use reputable tax software like TurboTax to file your tax return. The tax software will ask questions to determine if you're eligible for the EITC. This year, TurboTax also helps you determine if you are eligible for other government assistance programs, and there is an online version of TurboTax that's completely free.

If you earned less than $52,427 in 2014, you qualify for free tax return preparation through volunteer sites set up by the IRS. If you are at least 60 years old, you can get help with your taxes at an AARP Tax Counseling for the Elderly site. To find a convenient location for either of these options near you, visit the Free Tax Return Preparation site.

For more information, see the EITC Home Page.

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