More People in Pennsylvania, Especially Military, Eligible for EITC; Volunteers, Stand Ready to Help

Jan 30, 2003, 00:00 ET from Internal Revenue Service

    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 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 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
 ( ) 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
 not apply.
     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  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