Earned Income Tax Credit is an underutilized program that contributes to the financial stability of Utah's working poor.
The EIC money also improves the economy of communities and the state as it is spent. The program is fully funded for the 1996 tax year but is likely to face reduction over the next seven years of proposed budget balancing.The education program is reaching more people, says Liz Gorham, extension family resource management specialist in College of Family Life at Utah State University. For the 1993 tax year 84,407 Utahns filed and received $82 million in EIC money. For 1994, the numbers were up to 103,711 receiving $113.5 million and the numbers continue to rise.
Gorham says you may be eligible to receive EIC benefits if one of the following conditions exist:
- If you lived with one "qualifying child" in 1996 and your family earned less than $25,078, you can get up to $2,152.
- If you lived with two or more "qualifying children" in 1996 and your family earned less than $28,495, you can get up to $3,556.
- If you had no children living with you in 1996 and you earned less than $9,500 and you were between the ages 25 and 64, you can get up to $323.
A qualifying child is defined as a son, daughter, adopted child, grandchild, stepchild or foster child. The qualifying child must be under age 19, under age 24 but a full-time student or any age and disabled. The qualifying child must also have lived with you at least six months during 1996. However, foster children must have lived with you the entire year.
Types of income that count toward your Earned Income are: all salary and wages either cash or check, self employment, military pay, strike benefits, long-term disability, and contributions towards an IRA or 401 plan. Interest and unemployment checks are "taxable income" but not earned income.
How do you file for EIC? Workers with children should fill out form 1040A or 1040. Your return will determine if you owe any taxes or are getting a refund. Then file Schedule EIC to find out your Earned Income Tax Credit.
Workers without children fill out a 1040EZ before doing the Schedule EIC.
If after completing your tax return you find that you owe taxes, you can subtract your Earned Income Credit from this amount. If you owe no taxes but qualify for EIC, you can get money back.
Gorham says taxpayers can get free help at the local Volunteer Income Tax Assistance (VITA) site. There is also a toll-free number: 1-800-TAX-1040. This number gets busier the closer it gets to April 15. Volunteer Income Tax Assistance is also available at many locations now through April 15.
Forms and publications are available by calling 1-800-TAX-FORM. The publication for this program is No. 596 "Earned Income Credit." The form needed is called "schedule EIC."