Not everyone is required to file a tax return. But in some situations, you may want to, especially when you can get more money back than just the taxes withheld from your earnings. These special tax credits are called refundable tax credits for that reason. But to do claim them, you must file a tax return.
One of these special refundable tax credits is the Earned Income Tax Credit, which is typically available to low- or moderate-income earners. If you’re eligible for it, file a return to claim it. The maximum EITC allowed in 2016 is $6,269, which is available if you met certain income requirements and have three or more qualifying dependent children.
The IRS recently estimated that over 1 million taxpayers who didn’t file a return in 2013 may be entitled to refunds of over $1 billion. But it’s not too late. To collect that money, they must file their 2013 return by no later than this year’s deadline of April 18. If you don’t file by then, any tax refund and refundable credits you’re due from 2013 will become the property of the U.S. Treasury.
The EITC is a refundable credit for people who work and don’t earn a lot of money. For workers who have no children, the credit can be about $506. The EITC is available to those who had the following amounts of adjusted gross income and children in 2016:
- $47,955 (single or head of household filers) or $53,505 (married filing jointly) and three or more qualifying children,
- $44,648 (single or head of household filers) or $50,198 (married filing jointly) and two qualifying children,
- $39,296 (single or head of household filers) or $44,846 (married filing jointly) and one qualifying child,
- $14,880 (single or head of household filers) or $20,430 (married filing jointly) and no qualifying children.
Given that the EITC can result in a big check from Uncle Sam, it has become a hot target for tax fraud. So the IRS looks closely at returns claiming it. To claim the EITC, you’ll have to file a Form 1040, 1040A or a 1040 EZ and correctly report your earned income.
If you’re claiming a larger EITC due to having one or more qualifying children, you’ll also have to complete a Schedule EIC to give the IRS additional information about your qualifying children. The rules pertaining to just what makes a child eligible are laid out in Publication 596. The IRS also provide an EITC Eligibility Assistant tool on its website to help people determine their eligibility.
If you’ve filed for the EITC and the IRS disallowed it (for example, because a child you claimed was claimed by someone else in that year), you’ll need to file Form 8862, Information to Claim EITC After Disallowance, to recertify your eligible status before you can claim the credit.