State earned income credit can be worth hundreds of dollars for working families

BATON ROUGE – Hundreds of thousands of Louisiana families with low to moderate incomes can increase their state tax refunds with the Louisiana Earned Income Tax Credit. More than 400,000 taxpayers claimed this refundable tax credit in 2012 for an average benefit of $100.

The state earned income credit is equal to 3.5 percent of the federal EITC. For the 2012 tax year (federal returns due April 15, 2013), the maximum amount of the federal EITC is:

  • $5,891 with three or more qualifying children
  • $5,236 with two qualifying children
  • $3,169 with one qualifying child
  • $475 with no qualifying children

And the income thresholds for the federal EITC are:

  • $45,060 ($50,270 married filing jointly) with three or more qualifying children
  • $41,952 ($47,162 married filing jointly) with two qualifying children
  • $36,920 ($42,130 married filing jointly) with one qualifying child
  • $13,980 ($19,190 married filing jointly) with no qualifying children

To calculate the amount of the Louisiana earned income credit, multiply the federal EITC amount by .035, or 3.5 percent.  Some examples:

2012 Tax Year Federal EITC Louisiana EITC
$5,891 $205
$5,236 $183
$3,169 $111
$475 $17

 Claim the state earned income credit on Line 21 of the Louisiana Resident Individual Income Tax Return in the section titled “Refundable Tax Credits.”

2012 Louisiana Individual Income Tax returns are due May 15, 2013.

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IRS marks EITC Awareness Day, highlights expanded tax credit

IR-2010-14, Jan. 29, 2010

WASHINGTON — An expanded Earned Income Tax Credit (EITC) means larger families will qualify for a larger credit, offering greater relief for people who struggled through difficult financial times last year, the Internal Revenue Service said today.

The IRS and the Treasury Department marked EITC Awareness Day as their partners nationwide worked to highlight the availability of this important tax credit. EITC, which is in its thirty-fifth year, is one of the federal government’s largest benefit programs for working families and individuals. Last year, nearly 24 million people received $50 Billion in benefits. The average credit was more than $2,000.

“As part of the economic recovery efforts, there have been important changes to expand EITC to benefit taxpayers,” said IRS Commissioner Doug Shulman. “Today, more than ever, hard-working individuals and families can use a little extra help. EITC can make the lives of working people a little easier.”

Eligibility for EITC depends on earned income and family size, among other tests. However, single people and childless workers also are eligible, although for smaller amounts. For tax years 2009 and 2010, the American Recovery and Reinvestment Act created a new category for families with three or more children and expanded the maximum benefit for this category.

To qualify for the EITC, earned income and adjusted gross income (AGI) for individuals must each be less than:

  • $43,279 ($48,279 married filing jointly) with three or more qualifying children
  • $40,295 ($45,295 married filing jointly) with two qualifying children
  • $35,463 ($40,463 married filing jointly) with one qualifying child
  • $13,440 ($18,440 married filing jointly) with no qualifying children

The maximum credit for tax year 2009 is:

  • $5,657 with three or more qualifying children
  • $5,028 with two qualifying children
  • $3,043 with one qualifying child
  • $457 with no qualifying children

The maximum amount of investment income is $3,100 for tax year 2009. For families, there are also certain requirements for child residency and relationship that must be met. Additional eligibility information is available in FS-2010-11 and on the Web at IRS.gov/EITC.

Another new provision adds to the definition of a “qualifying child:” The child must be younger than the person claiming the child unless the child is totally and permanently disabled any time during the year. The child cannot have filed a joint return other than to claim a refund. Also new for 2009, if a qualifying child can be claimed by either a parent or another person, the other person must have an AGI higher than the parent in order to claim the child for EITC purposes.

Historically, one in four eligible taxpayers fails to claim the EITC, which is why the IRS and its free tax preparation partners host an annual EITC Awareness Day. This year, there are 68 news conferences being held around the country. Community coalitions and IRS partners nationwide also are also issuing 128 news releases, writing letters to the editor and using social media tools to spread the word about EITC.

Typically, people who fail to claim the EITC include workers without qualifying children, people whose earned income falls below the threshold required to file a tax return, farmers, rural residents, people with disabilities and nontraditional families such as grandparents raising grandchildren. People must file a tax return to claim the EITC.

Free help is available to EITC-eligible taxpayers. There are nearly 12,000 free tax preparation sites nationwide. People who want to prepare their own tax returns can visit Free File on IRS.gov. This free tax software and free electronic filing program will walk taxpayers through a question and answer format and help them claim the tax credits and deductions for which they are eligible.

EITC-eligible taxpayers also can seek assistance at the 400 IRS Taxpayer Assistance Centers nationwide. To assist EITC taxpayers, 167 IRS assistance centers will offer Saturday service on Jan. 30, Feb. 6 and Feb. 20.

***The following offices will be open in Louisiana and Mississippi:

    Baton Rouge, Louisiana located at 2600 Citiplace – Open from 9 am to 2 pm

    New Orleans, Louisiana located at 1555 Poydras Street – Open from 9 am to 2 pm

    Jackson, Mississippi located 100 West Capital Street – Open from 9 am to 2 pm

There is an online EITC Assistant also available on IRS.gov which can help taxpayers and tax preparers determine eligibility. And, for tax preparers and IRS partners, there is EITC Central which has links to toolkits that include marketing products.

More than 65 percent of EITC returns are prepared by a third party. The IRS urges taxpayers to choose a reputable tax preparer to avoid problems that come with an inaccurate tax return. The agency also urges tax preparers to follow due diligence requirements when preparing an EITC tax return. More information is available at www.irs.gov/eitc.

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Don’t forget about state earned income tax credit, Dept. of Revenue reminds taxpayers

A state earned income credit is available to Louisiana residents who claim the federal Earned Income Tax Credit (EITC), the Louisiana Department of Revenue reminds taxpayers.

The Louisiana earned income credit is equal to 3.5 percent of the federal EITC.  For the 2009 tax year, the federal EITC is worth a maximum of $5,657, depending on such factors as your filing status, income level and number of children that you claim as dependents.  According to the IRS, the income thresholds for the federal EITC are:

  • $13,440 ($18,440 married filing jointly) if you do not have a qualifying child
  • $35,463 ($40,463 married filing jointly) if you have one qualifying child
  • $40,295 ($45,295 married filing jointly) if you have two qualifying children
  • $43,279 ($48,279 married filing jointly) if you have three or more qualifying children

The maximum amounts of the federal EITC are as follows:

  • $5,657 with three or more qualifying children
  • $5,028 with two qualifying children
  • $3,043 with one qualifying child
  • $457 with no qualifying children

To calculate the amount of Louisiana earned income credit, multiply the federal EITC amount by .035 (3.5 percent).  Some examples:

  • For taxpayers with three children who file a federal return as married filing jointly, earning $36,000, the federal EITC is $2591.  These taxpayers are entitled to claim a Louisiana earned income credit of $91. 
  • For a taxpayer with two children who files a federal return as single, head of household, or qualifying widow(er), earning $30,000, the federal EITC is $2,173.  The taxpayer is entitled to claim a Louisiana earned income credit of $76.
  • For taxpayers with one child who file a federal return as married filing jointly, earning $20,000, the federal EITC is $5,657.  These taxpayers are entitled to claim a Louisiana earned income credit of $198.

Eligible Louisiana residents can claim the state earned income credit on line 21 of the Louisiana Resident Individual Income Tax Return (Form IT-540) in the section titled “Refundable Tax Credits.”

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‘Free tax preparation services VITA sites to open across SWLA’

From KPLC in Lake Charles:

Tax season is here and in Southwest Louisiana, an estimated $10 million of Federal Earned Income Tax Credits (EITC) go unclaimed by local taxpayers. However, not all eligible taxpayers may be aware or claim the credit. In addition, taxpayers who qualify for EITC also qualify for free tax preparation services through the use of Volunteer Income Tax Assistance Programs (VITA) which use IRS certified community volunteers. These volunteers can help qualifying taxpayers with special credits, such as Earned Income Tax Credit, Child Tax Credit, and Credit for the Elderly. The sites also offer free electronic filing (e-filing). Individuals taking advantage of the e-file program will receive their refund in ½ the time compared to returns filed on paper – even faster if refunds are deposited directly into the taxpayer’s bank account.

More at KPLCTV.com.

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