Let's say you have employees who experienced a major life change within the past year. Whether it be switching jobs, getting married or increasing the number of people in their family, there are many reasons why someone might be eligible for the Earned Income Tax Credit.
You can help your employees
understand their status by reaching out to them directly and double-checking that everyone is aware of their eligibility in terms of this tax credit. In the United States alone, eligible workers
and their families have been the recipients of nearly $65 billion in total EITCs. On average, people tend to receive over $2,000 per eligible individual, but some have received over $6,000
individually.
Now, the maximum total value of the EITC for employees without dependents and who make less than $16,400 per year while also being between the ages of 25 and 64 is greater than $550 each. That said, be sure to take a look at current numbers for the year in question, as these values are prone to rising and falling on an annual basis.
By urging your employees to look into whether they qualify for the tax credit, you might end up encouraging those employees who do not normally file tax returns to double-check whether they qualify for the EITC as well as any other potentially applicable tax credits.
Furthermore, tax credits like the EITC lower the amount of tax that people owe. In fact, tax credits like these might even yield a refund in favor of your employees. After all, the IRS estimates that approximately 20% of all taxpayers who are eligible for the EITC do not claim the tax credits that apply to them.
Here are the types of people who are likely eligible for the EITC:
- Those who do not have children.
- People with limited English-speaking abilities.
- Veterans.
- Those who reside in nonurban areas.
- Native Americans.
- Individuals who earn less than the filing requirements dictate.
- Married taxpayers who won't be filing a joint return.
When speaking with your employees, it is imperative that you stress the fact that eligibility for the EITC can only be determined once employees file their tax returns and then claim the tax credit. If any of your employees are in need of tax preparation assistance, free help is available online as well as via various volunteer organizations.
How to pursue possible eligibility for the EITC
- File for free on the IRS's official website. You can access complimentary brand-name tax software from the IRS. With this resource, taxpayers will sort through a questionnaire and provide the IRS with honest responses.
- You can file for free with the help of tax preparation websites. Additionally, employees who are eligible for the EITC can pursue cost-free assistance thanks
to the help of the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs. If you are looking for a location of one of these programs, choose one of the following options to
find the place closest to you:
- Find a location for "free tax help" via the IRS.gov website.
- Apply via the IRS2Go smartphone app.
- Call 800-906-9887 toll-free.
- You can also reach out to a trusted tax professional who can help you prepare your tax returns and provide you with helpful information in addition to accurate
advice. When choosing someone to help you file your taxes, only consider people in the following professions:
- Certified public accountant.
- Enrolled agent.
- Attorney.
- Member of a national tax professional group.
As always, the IRS strives to remind everyone about the importance of providing the agency with all required documents and information when filing their tax returns. Make sure you have your valid Social Security number, as well as your spouse's SSN if you plan to file jointly.
Additionally, each of your qualifying children must be claimed when seeking eligibility for the EITC, and every child also must have a valid SSN. Last but not least, each SSN must have been issued prior to April of the year the return is due.
Be sure to note that all taxpayers are responsible for the accuracy and honesty of their individual tax returns, even if someone else prepares them on the taxpayer's behalf. While the rules for this tax credit can be very complex, the IRS encourages you to make sure you fully understand all the rules to the best of your ability.