by Andrew Ysiano
Many hard-working Hispanic families are missing out on thousands of dollars each year at tax time. The IRS estimates that one in four people who are eligible for the Earned Income Tax Credit (EITC) fail to claim it when they file their taxes, leaving that money on the table.
With less than two more weeks before this year’s income tax filing deadline on April 17, time is running out to take advantage of this important credit. The EITC can keep as much as $5,700 in your pocket and there is a new easy way to find out if you qualify, so it’s important to learn more about what the tax credit is, who is applies to, and how you can find out if you are eligible.
The EITC is a tax credit that provides a financial boost for low-wage workers, especially those raising children. In order to claim the EITC, you must be under the age of 65 and have earned no more than $49,078 in 2011. Unlike many other tax credits, the EITC is refundable, which means that if the amount of the credit is more than the taxes you owe, you will get a refund for the rest of the credit, putting money directly into your pocket.
The EITC was designed to both reduce poverty and encourage work. Because taxpayers put 97 percent of their refunds back into the local economy, it also improves the health of communities across the country. Just this year, the EITC has helped California taxpayers including a young couple in need of car repairs, parents sending their daughter to college for the first time, and a single mom who wanted to invest in her growing small business. Many new citizens have also used their EITC refund to finance immigration costs for others in their family or send money back to relatives in their home country.
In the current economy, it is more important than ever that all American families take advantage of this significant tax credit.
The easiest way to see if you qualify is by using the new EITC Finder mobile application on your smartphone. Available in English and Spanish, the app asks a few simple questions like, “Are you married or single?,” “How many children do you support?,” and “How much money did you earn last year?” The app then determines whether or not you should qualify for the EITC and estimates how much you could get back from the IRS and your state.
The app also tells you how you can easily claim the EITC by preparing and filing your taxes with one of the free products offered through the IRS Free File program and 22 state Free File programs. Free File is an innovative partnership between the IRS and multiple private companies that lets people across the country prepare and file their taxes for free, using brand-name software.
And thankfully, you don’t need much more than common sense to claim the EITC by filing your taxes online. Recently, three women at a domestic violence shelter who learned about the EITC and Free File while taking an economic empowerment class taught themselves how to complete their taxes for free—and then used their refunds to get their families back on their feet. Like them, if you can use a computer, then preparing your own taxes with Free File is easy and quick. Just gather the tax forms sent to you by your employer (like a W-2) and your bank (IRS Form 1099). The software will walk you through some of the same basic questions as the app to collect the information necessary to prepare your return. While it may seem daunting at first, you could be finished in as little as 15 minutes and save hundreds of dollars.
Everyone struggling to cover rent, groceries and utilities knows that every penny counts. With little time left in tax season, now is the time to make sure that you and your loved ones are getting all the money you deserve. Learn about the EITC and take advantage of Free File to claim it today by downloading the EITC Finder app from the App Store, Android Market, or the Amazon Appstore. If you don’t have access to a smartphone, there is also an online calculator available at http://tinyurl.com/eitccal. You can also learn more about Free File at freefile.irs.gov or taxprephelp.org.
by Andrew Ysiano