When it comes to doing taxes, most of us would rather just hand everything over to someone at H&R Block. Not only do we not understand how our system of taxation really works, but as long as we’re getting money back (or coming out even) instead of paying at the end of the year, we have no interest in learning. However, you probably don’t realize the many opportunities you’re missing out on to get back some of the money you pay to the government every year. In point of fact, you may be eligible for an Earned Income Tax Credit (EITC) that you’ve failed to take advantage of. And with the ongoing recessions producing more layoffs and longer stretches of unemployment, you need to get every dollar you’re due. So if you’re interested in finding out how to claim an EITC, here are just a few steps you’ll need to take.
First, you need to find out if you’re eligible. There are several requirements for those seeking to claim an EITC. First and foremost, you must earn. It doesn’t matter if you receive wages from a company, a private party, or you’re self-employed. If you’re not earning any money, you’re not entitled to an EITC. Further, you must have a valid Social Security number, be between the ages of 25 and 65, and have no foreign income (amongst other things). But the main thing that would qualify you for this type of credit is low earnings. The exact amount depends on the size of your household (including a spouse and dependents), but if you feel that you may be within the limits due to your low income, you should check the requirements on irs.gov. You may be eligible for up to approximately $5,600, which is a sum you certainly don’t want to pass up.
Once you’ve determined your eligibility, it’s time to tackle the hard part: filing. This means you not only need to fill out the associated paperwork, listing all earnings (wages, salary, tips, disability, etc.) so that you can figure out the amount of the credit. There are actually two ways to establish what your credit will be. You could simply send in your paperwork and let the IRS figure it out for you. Or you can try to calculate it on your own, although this second method will require you to fill out the EIC worksheet provided in one of several tax instruction booklets (including the 1040, 1040A, or 1040EZ). Of course, if you choose this road, you could always just have your tax preparer handle it for you, but chances are if you qualify for an EITC you probably can’t afford to pay someone to do your taxes.
Now it’s as simple as filing your return. In truth, doing your taxes is never easy. And including extra paperwork for additional money back is bound to be even more difficult (since you have to be certain that you dot every I and cross every T). But if your earnings are low and you can qualify for a better return via EITC, then you should make every effort to take advantage of the opportunity. It is made to help those who need it.
Breana Orland writes for Purchase Order Financing you can grow your business and pave the way for more.
