Money

Loan Modification Hell? Earned Income Tax Credit Cash Might Help

By Ilyce Glink

Updated on: January 31, 2010 / 11:53 PM EST / MoneyWatch

It's another Hallmark Holiday: Earned Income Tax Credit Awareness Day.

The IRS designated Friday, January 29, 2010 as Earned Income Tax Credit Awareness Day, hoping to highlight changes in the Earned Income Tax Credit that will benefit even more families. Last year, 24 million Americans received $50 billion in earned income tax credit refunds.

Families with three children now qualify and the amount you can receive has gone up.

If you're in loan modification hell, or had an extremely reduced income in 2009, you may qualify for the earned income tax credit, according to Barry Wides, Deputy Comptroller Community Affairs, Office of the Comptroller of the Currency.

Earned Income Tax Credit Income Limits

The new income limits for tax year 2009 are:

$43,279 ($48,279 if married filing jointly) for families with three or more children;
$40,295 ($45,295 if married filing jointly) for families with two children;
$35,463 ($40,463 if married filing jointly) if there is one child;
$13,440 ($18,440 if married filing jointly) for no children;
Investment income must be $3,100 or less.

Children must meet certain relationship and residency requirements.

2009 Earned Income Tax Credit Refunds

$5,657 for a family with three or more children;
$5,028 for a family with two children;
$3,043 for a family with one child;
$457 if there are no children.

Free Tax Preparation Help Available

If your income is approximately $49,000 a year or less, you may qualify for free tax preparation services:

According to the IRS, it has more than 65 national partners, 300 community based coalitions and thousands of local partners. These partnerships provide free tax assistance and educate people about available tax credits.
There are more than 12,000 free tax preparation sites nationwide. Approximately 4,500 sites were Volunteer Income Tax Assistance sites that provide free services to people who make approximately $49,000 a year or less. Approximately 8,000 sites were Tax Counseling for the Elderly locations operated by AARP and free for low-income people who are age 60 or older.
167 IRS tax assistance centers will offer free tax preparation help on February 6 and 20.

For more details, visit IRS.gov.

Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and the upcoming Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com.