WASHINGTON, Jan. 30 /PRNewswire/ -- The Internal Revenue Service today
reminded taxpayers that changes in the Earned Income Tax Credit (EITC) law
will expand the number of low-income working taxpayers, especially military
personnel, who qualify for tax relief. The IRS urged taxpayers to review EITC
requirements to determine their eligibility.
February marks the month in which a peak number of EITC claims are filed.
The IRS is working to provide help in several ways:
-- Many local IRS offices nationwide will be open Saturdays Feb. 8,
Feb. 15 and Feb. 22 specifically to help people with EITC claims.
-- Tax assistance sites operated by volunteers will begin opening in
-- Taxpayers can visit IRS.gov to see if they qualify for free Internet
tax preparation and electronic filing through IRS Free File.
"More hard-working Americans can receive tax relief or even a tax refund
because of changes in this credit. We want all those who are eligible, but
only those who are eligible, to apply," said Acting IRS Commissioner Bob
Wenzel. "The IRS and its network of volunteers are ready to help taxpayers
complete accurate returns on this complex issue."
For a complete list of EITC requirements, taxpayers should review
Publication 596 which is available on IRS.gov or by calling 1-800-TAX-FORM
(1-800-829-3676). Publication 596 contains a worksheet that helps taxpayers
determine their eligibility. Also, taxpayers can use IRS.gov
( www.irs.gov/eitc ) to answer questions and determine eligibility.
According to the IRS, 690,859 Pennsylvania taxpayers claimed the EITC for
tax year 2001, and received $1,065,971,914 in earned income tax credit. Both
the income limits and the maximum credit have increased for the 2002 tax year
with the automatic cost of living calculations. To be eligible for a full or
partial credit, a taxpayer must have an adjusted gross income of less than:
-- $33,178 ($34,178 married filing jointly) and two or more qualifying
-- $29,202 ($30,202 MFJ) and one qualifying child;
-- $11,060 ($12,060 MFJ) with no children.
The maximum earned income credit is $4,140 for families with two or more
qualifying children, $2,506 for families with one qualifying child and $376
for an individual without children.
Among the significant changes for the 2002 tax year was a redefinition of
what constitutes earned income. Now, earned income no longer includes
nontaxable income such as military pay for housing, subsistence allowances or
combat. The change will expand the number of military personnel who may be
eligible for the credit. Also benefiting are people who participate in salary
deferral plans such as 401(k) and Thrift Savings or people who receive
employer-provided benefits such as dependent care benefits.
Other significant changes include:
-- Income calculations will be based on adjusted gross income, not
modified adjusted gross income.
-- Eligible foster children must live with a guardian more than half a
year, reduced from a one-year rule.
-- For taxpayers who are "married filing jointly," the maximum adjusted
gross income limit is $1,000 more than other filing statuses.
-- EITC is no longer reduced by the amount of any alternative minimum
Under the new "tie-breaker" rule, if two people have the same qualifying
child, you can choose which person will use the child to claim EITC. However,
if you both claim the credit using the same child, the child will be treated
as the qualifying child of only one person. Under the tie-breaker rule, the
child can be treated as a qualifying child only by:
-- The parent, if one person is the child's parent,
-- The person with the highest adjusted gross income, if neither person
is the child's parent,
-- If both persons are parents of the child and they do not file a joint
return together, the parent with whom the child lived the longest
during the tax year,
-- If both persons are parents of the child, they do not file a joint
return together, and the child lived with both for the same length of
time during the tax year, the parent with the highest adjusted gross
If you and your spouse are the parents and file jointly, these rules do
Free tax help is available from many sources such as the Volunteer Income
Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs.
The IRS is working with national organizations and community coalitions across
the nation. These local partnerships will help ensure working families and
individuals become aware of the tax credit and learn how to apply. In 2002,
there were 5,200 VITA sites nationwide, often located in shopping centers,
libraries, universities, churches or community centers. VITA volunteers
assisted more than 1.7 million taxpayers.
Many of the more than 400 IRS Taxpayer Assistance Centers, usually located
in IRS local offices, will open nationwide Feb. 8, 15 and 22. The peak period
coincides with the receipt of W-2 income statement forms from employers.
People who want to prepare their own tax returns should see Free File on
IRS.gov. Many low-income individuals may qualify for online tax preparation
and electronic filing for free as part of an IRS partnership with private-
sector software firms. Individuals are under no obligation to purchase any
product in return for the free services.
Contact: Bill Cressman for IRS, 215-861-1550
SOURCE Internal Revenue Service