Understanding the Earned Income Credit

Did you know there are ways to help you pay the bill? With the right information you could relieve the stress of everyday bills by taking a second to read the below, you could save some money.

What is EIC (Earned Income Credit)? It is a tax credit provided to help offset the basical living expenses (including FICA taxes) of low income employees.

Are you eligible?

1. With no qualifying child: (a) must have expected 1995 earned income and adjusted gross income of less than $9,000, (b) must have lived in the US for at least 6 months, (c) must be over age 25 but below age 65, (d) cannot be claimed as a dependent by anyone, (e) cannot be the qualifying dependent child of another person, (f) must have worked and earned income even if such income is not taxable, (g) must have a filing status other than married filing separately, (h) must not be able to exclude any income that is earned in foreign countries, and (i) must file a return that covers a 12 month period; or
2. With one qualifying child: (a) must have expected 1995 earned income and adjusted gross income of less than $24,396, (b) must have the child living with him in the US for more than 6 months out of the year (12 months for foster children), (c) must claim the child as a dependent, (d) whose qualifying child cannot be the qualifying child of another person whose adjusted gross income is more than his, and (e) requirements (e) through (i) under number 1 above.
3. With more than one qualifying child: (a) must have expected 1995 earned income and adjusted gross income of less than $26,673, and (b) requirements (b) through (h) under number 2 above.

With a child the requirements are

A qualifying child: (a) is the employee's child, adopted child, stepchild, foster child, or a descendant of his child or adopted child, (b) is under age 19 or is a full time student under age 24 or is permanently and totally disabled, and (c) lived with the employee in the US for more than 6 months out of the year (12 months for foster children) or was born, or died, during the year and the employee's home in the US was the child's home for its entire life.

The above information is for those who are in a tough financial position. There are benefits which the government could provide if you are working and are barely making ends meat. With the right information and paperwork you can take advantage of these certain benefits.

More can be read at http://www.payroll-taxes.com/articles/211-the-earned-income-credit.htm.