2015 EITC

Feb 23, 2016 by

earned income tax credit EITCThe average Earned Income Tax Credit for the 2014 tax year was nearly $2,500. But this wasn’t enough to entice 20% of taxpayers eligible for the credit to claim it. They let Uncle Sam keep their money! This post is about being one of the 80%, not the 20%.

What’s a Tax Credit?

Many people confuse tax credits and deductions. Tax credits are a lot more valuable than tax deductions.

→ a $1,000 tax credit means $1,000 more in your pocket.

→ a $1,000 tax deduction means—if you’re in the 15% tax bracket—$150 more in your pocket.

Because of this math, many taxpayers can’t be bothered with tracking all the many possible and often individually small deductions. Unfortunately tax credits can get swept up in this can’t-be-bothered-with-all-these-tedious-tax-details mentality, costing taxpayers big bucks in lost opportunity.

The Earned Income Tax Credit

The Earned Income Tax Credit—or EITC—is the Mother of all Tax Credits for the working middle class. For 2015, the EITC can reach $6,242! That’s money in your pocket friends!

Who’s Eligible for the EITC?

Did you work in 2015?

Did you earn less than $53,267?

If ‘yes’ to both, then you must check whether you’re eligible for the EITC. Here are a few things to know:

  • You’re ineligible for the EITC if you’re married but file a separate tax return.
  • To be eligible, you must have a Social Security number that is valid for employment for yourself, your spouse, if married, and any qualifying child listed on your tax return.
  • If you had no earned income in 2015, you’re ineligible for the EITC.
  • If you are a member of the U.S. Armed Forces serving in a combat zone, special rules apply.

If you pass these EITC eligibility screens, then have a look at the IRS’ EITC assistant:

2015 IRS Earned Income Tax Credit Assistant

By answering a few questions, you’ll learn for sure whether you’re eligible and even get an estimate of your EITC.

Don’t Let Uncle Sam Keep Your Money!

Apparently each year thousands of middle class taxpayers—many of whom are probably struggling to save enough to help the kids with college and then retire someday—let the federal government keep billions of dollars that rightfully belongs to them by overlooking the EITC. That’s crazy!

Take a moment to check your EITC eligibility. The payback on the few minutes invested could be many thousands of dollars! What else can you do today to earn a similar rate of pay? 🙂

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