Depending on your yearly income, you may qualify for the Earned Income Tax Credit. This is a refundable tax credit based on earned income that is available to certain low-income wage earners.
The earned income tax credit is computed by multiplying your earned income (limited to a Maximum Earned Income Amount) by a specified percentage that is based on whether you have any qualifying children and, if so, the number of qualifying children. The credit is also subject to a limitation based on your adjusted gross income.
For purposes of the credit, your Earned Income includes:
(4) Other Taxable Employee Compensation,
(5) Net Earnings from Self Employment, and
(6) Any Taxable Disability Benefits received under an employer’s disability retirement plan before reaching minimum retirement age.
Earned Income does NOT include:
(1) Interest and dividends,
(2) Pensions and Annuities,
(3) Social Security and railroad retirement benefits (including disability benefits),
(4) Alimony and Child support,
(5) Welfare Benefits,
(6) Worker’s Compensation payments,
(7) Unemployment Compensation,
(8) Nontaxable Foster Care payments,
(9) Veterans’ Benefits (including VA rehabilitation payments),
(10) Nontaxable Workfare payments,
(11) Amounts received for work performed while an Inmate in a Penal Institution (including a halfway house or work release program),
(12) Amounts earned by a spouse and treated as belonging to the taxpayer under Community Property State laws, and
(13) Nontaxable Military Pay.
Generally, if you are married, you can claim the Earned Income Tax Credit only if you and your spouse file a joint return.
There are many requirements that must be met to qualify for the earned income credit but, if you do qualify, it can be quite beneficial. Please contact me at your earliest convenience so we can discuss whether or not you qualify for the Earned Income Tax Credit and, if so, what the maximum credit might be.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
(Updated 05012021-1 320-780)