EARNIT KEEPIT SAVEIT

1
EARNIT KEEPIT SAVEIT

• HOW THE EARNED INCOME TAX CREDIT
• CAN HELP YOU
• Erie FREE Taxes
• A project of The Erie Community Foundation

2
INTRODUCTION

• The Earned Income Tax Credit (EITC) is a
  refundable cash tax credit for individuals and
  families who qualify to claim it.
• The EITC may reduce or eliminate the amount of
  federal income tax you owe and may also give you
  a cash refund.
• Claiming the EITC at income tax time allows you
  to keep more of your hard-earned money.

3
WIN-WIN for EMPLOYEE ,EMPLOYER, and COMMUNITY

• The EITC means more money in your pocket, either
  as a lump sum after your taxes have been filed,
  or in your paychecks throughout the year.
• The EITC has the potential to increase your wages
  by up to 2/hour.
• The EITC rewards the work you do.
• The EITC helps to stabilize the workforce.
• The EITC creates new economic activity within the
  community, thus being an important economic
  development tool for Erie County.

4
INCOME LIMITS

• To qualify for this cash credit, your earned
  income and adjusted gross income (AGI) for 2008
  must each be less than
• -38,646 (41,646 married filing jointly) with
  2 or more qualifying children
• -33,995 (36,995 married filing jointly) with
  1 qualifying child
• -12,888 (15,880 married filing jointly) with
  no qualifying children.
• Investment income must be 2,950 or less for
  2008.
• Sources of income wages, salary, tips, net
  earnings from self-employment, union strike
  benefits, long term employer paid disability
  benefits received prior to minimum retirement
  age.

5
EMPLOYEE ELIGIBILITY RULES

• You, your spouse, and any children born before
  December, 31, 2008 must have a valid SS number.
• You must have earned income.
• You must be a U.S. citizen or resident alien all
  year, or nonresident alien married to a U.S.
  citizen, or resident alien and filing a joint
  return
• If you do not have a qualifying child, you must
  be age 25 years of age but under 65 years at the
  end of the year

6
WHAT IS A QUALIFYING CHILD

• The child is a son/daughter, grandchild/stepchild/
  adopted child, brother/sister, stepbrother/sister
  (and their descendents), or foster child of
  yours.
• At the end of 2008, the child is under age 19, or
  a student under age 24.
• Any age child permanently and totally disabled.
• The child has lived with you for over half of
  2008.
• A child who is married at the end of 2008 and you
  are able to claim him/her as a dependent.

7
MAXIMUM CREDIT REFUNDfor 2008

• 4,824 with 2 or more qualifying children
• 2,917 with 1 qualifying child
• 438 with no qualifying children

8
CLAIMING THE EITC at a VITA SITE

• Even if you have not previously filed a federal
  tax return, you must file a federal Form 1040 to
  claim the EITC.
• Locate a free tax preparation VITA (Volunteer
  Income Tax Assistance) site located throughout
  the city/county. VITA sites are operated by Erie
  FREE Taxes at no cost to the employee/taxpayer.
• After November 15, 2008, call 1-888-829-5680 for
  site locations and schedule of service hours.
• Make sure you bring all required documents to the
  free tax prep site at the time of your
  appointment.

9
IMPACT ON PUBLIC BENEFITS

• Should you file for a public/government benefit,
  the EITC does not count as income in deciding
  eligibility to receive cash assistance, food
  stamps, SSI, Medicaid, or public housing.

10
ADVANCE EARNED INCOME TAX CREDIT

• If you think you will have income in 2008 less
  than 34,000 (or 37,000 for married workers),
  and you have at least 1 qualifying child, you can
  make arrangements through your employer to
  receive part of the cash credit (maximum of
  1,750 for 2008) in your paychecks during the
  year.
• The remaining credit amount will be refunded
  after you file your federal tax return at the end
  of the year.
• Your Advance AEITC payments are not taxable as
  income.

11
LENDING SERVICES TO AVOID

• Be familiar with these paid tax preparer lending
  services.
• Buying these services will reduce your EITC
  refund check
• by hundreds of dollars! When you use a VITA site
  (free tax
• prep site), you do not need any of them.
• RAC (Refund Anticipation Loan)
• RAC (Refund Anticipation Check)
• Payday Loans

12
ADVANTAGES OF THE AEITC

• Additional money in your paychecks can make it
  easier to pay regular expenses like rent, child
  care, school supplies, clothing, groceries,
  gasoline, and meeting other day-to-day needs.

13
AVOIDING OVERPAYMENT

• If your income rises above the income limit
  during the tax year, you need to tell your
  employer immediately to stop the advance
  payments.
• Major changes that can effect your continued
  eligibility for the AEITC include increase in
  family income, marriage, or the eligibility of a
  qualifying child.

14
EARN IT KEEP IT SAVE IT

• EARN IT Your EITC refund is money you earned.
• KEEP IT You do not need to pay a commercial tax
  preparer to claim it.
• With Direct Deposit, your refund will be sent to
  you within 7-10 days of filing.
• You dont need to take out an expensive, high
  interest loan that commercial preparers offer in
  order to receive your own money only a few days
  earlier.
• SAVE IT Keep all of your refund by using a VITA
  site through Erie FREE Taxes.