What is the Federal Earned Income Tax Credit?

What is the Federal Earned Income Tax Credit?

The EITC, or EIC, is a refundable tax credit.

Enacted in 1975, the initially modest EIC has been expanded by tax legislation on a number of occasions, including the more widely-publicized Reagan EIC expansion of 1986. The EIC was further expanded in 1990, 1993, and 2001 regardless of whether the act in general raised taxes (1990, 1993), lowered taxes (2001), or eliminated other deductions and credits (1986). Today, the EITC is one of the largest anti-poverty tools in the United States (despite the fact that most income measures, including the poverty rate, do not account for the credit), and enjoys broad bipartisan support.

The general rules for 2008 qualification are as follows:

2008 credit amounts:

The maximum Advance Earned Income Tax Credit* (Advance EITC) for 2008 an employer is allowed to provide to an employee’s pay is $1,750.

Tax Relief for Midwest Disaster Areas

Special tax relief related to severe storms, tornadoes or flooding, occurring after May 19, 2008, and before August 1, 2008, is available to individuals in portions of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska and Wisconsin that were affected by these disasters. Tax benefits include the option to use 2007 earned income to figure a 2008 earned income tax credit (EITC) and additional child tax credit.  Details on these and other relief provisions are in Publication 4492-B.

* The advance EITC allows taxpayers who expect to qualify for the Earned Income Tax Credit (EITC) and have at least one qualifying child to receive part of the credit in each paycheck during the year the taxpayer qualifies for the credit. The credit is sometimes called the AEITC.

No tag for this post.

Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.

RSS feed for comments on this post | TrackBack URI for this post
Comments

No comments yet.

Leave a comment

(required)

(required)


Time limit is exhausted. Please reload CAPTCHA.