Earned Income Tax Credit (EITC)
One of the key work incentives for individuals and families who earned $51,567 or less last year is the Earned Income Tax Credit (EITC) which allows low and moderate income workers to keep more of what they earn. It’s also the federal and MA refundable tax credit that is most often missed. The IRS estimates that four out of five eligible workers and families get the credit, but millions who could claim it don’t.
Last year more than 27 million workers and families received more than $63 billion in EITC. In Massachusetts, which gives taxpayers who qualify for the federal EITC, 15% of what they received from the federal amount, 425,000 workers claimed the state EITC and received $125.5 million or around $295 per filer.
The amount of EITC varies depending on filing status, income and family size. The IRS has an online EITC calculatorwww.irs.gov/eitc to help taxpayers and tax preparers determine if they are eligible and estimate their EITC. The refund can range from up to $487 for workers without children (including the self-employed and farmers) and a maximum credit of up to $6,044 for those with three or more qualifying children. Even if a taxpayer didn’t qualify last year for EITC, they should always check their eligibility, especially if personal circumstances have changed.
To get the federal EITC you must file a tax return even if you are not otherwise required to file a return or do not owe any tax. Once a taxpayer gets the amount of the federal EITC they can enter it on line 40 on the Massachusetts state return and multiply by 15%. Taxpayers filing for MA EITC must also include Schedule DI which lists information on qualifying children.
Even if the EITC claim is prepared by a tax preparer, taxpayers are still responsible for the accuracy of the return. Beware of any scams that claim taxpayers don’t need documentation to back up the claim or promises they can increase the amount of the EITC. Scams that create fictitious qualifying children or adjust income levels to get the maximum EITC could leave taxpayers with a penalty.
Every year, the Massachusetts Department of Revenue asks selected taxpayers to verify the EITC claim by requesting such documents as social security cards for qualifying children, receipts, bank account statements and cancelled checks and expense sheets for taxpayers who may be self-employed. All information is then shared with the IRS to be sure that only those workers who are eligible get the credit and the right amount of the refund.
So be sure to claim the EITC if you’re entitled to it, but keep good records to verify your claim.
Five Reasons to E-File with DOR’s WebFile for Income posted on Feb 24
With Tax season well under way; DOR would like to help you make the decision to E-File with WebFile for Income this year. We know, “I’m not computer savvy” or “What about the safety of my information” has been said many times before, but we’d …Continue Reading Five Reasons to E-File with DOR’s WebFile for Income
Class in Session at DOR University posted on Jan 20
Looking to educate yourself this tax season? Want to learn more about tax options, or DOR-related issues? All this can be achieved at DOR University, the Department of Revenue’s free online e-learning module. DOR University, created to offer free tax education to the public and …Continue Reading Class in Session at DOR University
Multi-agency investigation in two states leads to charges posted on Nov 19
Earlier this year, the Massachusetts Illegal Tobacco Commission, chaired by DOR Commissioner Amy Pitter, released a report on the illicit tobacco trade which recommends that teaming up with federal, state and local law enforcement can be a successful model for combatting such criminal activity. And …Continue Reading Multi-agency investigation in two states leads to charges