Did you know?
Free tax help is available to ensure working families get the refunds they deserve
The Earned Income Tax Credit (EITC), sometimes called EIC is a tax credit to help you keep more of what you earned. It is a refundable federal income tax credit for low to moderate income working individuals and families making less than $52,000. Eligible individuals may receive refunds up to $487 and families may receive refunds up to $6,044 from EITC. See the below table for more details.
|
2013 Earned Income Credit |
||
|
Number of Qualifying Children |
Earned Income AGI Less Than |
Maximum Credit |
|
0 |
$14,340 ($19,680 MFJ) |
$ 487 |
|
1 |
$37,870 ($42,310 MFJ) |
$3,250 |
|
2 |
$43,038 ($48,378 MFJ) |
$5,372 |
|
3 or more |
$46,227 ($51,567 MFJ) |
$6,044 |
Even though the EITC is available to millions of low-income individuals and working families, there is a significant segment of this population who do not claim it. See this video about EITC. Individuals with earned income (i.e. salaries, wages, commissions, tips, etc.) may claim this credit in forms 1040 or 1040A and must complete and attach Schedule EIC. Workers without children can file the 1040EZ. Families claiming the EITC must include correct names and social security numbers for all persons in the household.
It is important to mention the EITC is not considered income for other benefits such as cash assistance, food stamps, Medicaid or public housing. However, families participating in the Personal Investment Enterprise (PIE) Program can use this refund to make a lump deposit up to $500 in order to reach their savings goal.
Tax time is one of the few opportunities when low-income households receive a sizable amount of money – especially if they take advantage of the earned-income tax credit. While it may be tempting to spend that money on wants vs. needs, saving your tax refund can protect you from needing to turn to payday loans or high-cost credit later in the year, and can serve as the foundation to grow your savings.
Here are four ways to get the most value from your tax refund this year:
1. Pay down your debt. Use your refund for some much needed debt relief . Pay off your credit card balance. Alternatively, you can apply your refund toward other debts, like a car loan or a home equity loan.
2. Save for a rainy day. Why not give yourself an even bigger return on your tax refund by putting the money into a share or savings account? It's always helpful to have a savings account to draw from when a major car repair bill, medical emergency or other unexpected expense comes along. That way, you don't have to borrow money and add to your debt-load.
3. Consider your financial goals. Trying to save for a house or car down payment? Hope to contribute to your child's college tuition?
Consider applying your tax refund toward these goals. If you don't yet have a set of short-term and long-term financial goals, put one together. You'll be more conscientious about how you spend your refund or any other extra money that comes your way.
4. Save your refund for a chance to win $25,000. This year, instead of taking your refund as one check or direct deposit, use IRS Form 8888 to “split” your refund. All you need is your savings account information OR you can decide to order a U.S. Savings Bond for yourself or someone else (no account information needed). Learn more at https://www.saveyourrefund.com/
Remember, you work hard for your money and you deserve to enjoy a healthy financial lifestyle. Put some thought into how you use your tax refund. Making smart financial decisions is not always easy, but it will definitely benefit you and your family over the long term.
There are several programs that offer FREE tax services to families qualifying for the EITC:
*The IRS provides online Free File to claim EITC. Visit: http://www.irs.gov/efile/index.html
Additional information about EITC may be found at: http://www.irs.gov/individuals/article/0,,id=96406,00.html
*The Piton Foundation has conducted the Tax Credits for Working Families Campaign for over 20 years. The primary goal is to increase the number of eligible families in Colorado receiving the Earned Income Tax Credit, as well as other tax credits aimed at helping lower-income families. Visit http://www.piton.org/eitc for additional information on EITC. The Piton Foundation provides tax preparation assistance throughout Colorado at Tax Help Colorado locations.
Click this link to Download Boulder and Broomfield Free Tax Sites 2014
When filing taxes, be sure to also ask about…
· The Child Tax Credit, which also helps working families with children. This credit is worth up to $1,000 per child. File form 8812 with your tax return.
· Special tax credits for those who are saving for retirement or paying for college.
Federal, State and Local governments also encourage claiming this refund since it helps the economy. Families receiving this credit use the money to increase savings, purchase assets of high value or simply purchase clothes or groceries, which increase the sales tax revenue to fund other programs. If you know of anyone who qualifies for the Earned Income Tax Credit (EITC), please encourage him/her to include Schedule EIC with their 2013 Income Tax Return.
Make the most of this tax season and consider spending down debt, saving for a rainy day, consider your financial goals, and save your refund in several ways with IRS Form 8888.
Information for this blog provided by Katie Bryan, America Saves Communications Director and Nino Gallo, Community Action Programs at Boulder County.
The Personal Investment Enterprise Program, a partnership between Foothills United Way and Community Action Programs provides tools that empower low-income individuals and families to save and build assets to strengthen their economic stability. To learn more about the program visit www.bouldercountypie.org. The first step in applying to the program is to attend an orientation meeting with Nino Gallo at Community Action Programs at Boulder County. Nino may be reached at 303-441-3998 or at [email protected].
