SPECIAL TO LOW INCOME WAGE EARNERS!
HAVE YOU CLAIMED MONEY THE IRS WANTS TO GIVE YOU?
(Article published in HWW March 2008)
by Peter White
Yes, believe it or not, the IRS wants to give you money.
Of course, there are some conditions attached and, hopefully, this article will help shed some light on them for you.
Here are two frequently overlooked areas where you may be due money from the IRS.
The Earned Income Tax Credit, or EITC for short (sometimes known as EIC for Earned Income Credit), is based on the income you receive during the year from your employment which is shown in Box 1 on the W2(s) you receive from your employer(s). If you are self-employed your income is shown in Box 7 on Form 1099MISC and the rules are more complicated for income from that source. Therefore, this article will only address income recorded on the W2 form(s) you receive. EITC is payable to individuals between the ages of 25 and 65, who are single, or married and filing a joint return. Married couples filing separate returns are not eligible for this credit.
Filing as a single person
0 children -- W2 Box 1 less than $12,590
1 child -- W2 Box 1 less than $33,241
2 or more -- W2 Box 1 less than $37,783
Married, filing joint return
0 children -- W2 Box 1 less than $14,590
1 child -- W2 Box 1 less than $35,241
2 or more -- W2 Box 1 less than $39,783
The amount of the EITC is based on a sliding scale, and here are some examples of how much the IRS will give you.
• If you earned between $6,950 and $7,000 and have no children, your EITC will be $428.00. If you earned the same amount and have one child, your EITC will be $2,372.00. With two children it would be $2,790.00.
• If you earned between $14,600 and $15,250 your EITC with one child will be $2,853.00. With two children it will be $4,716.00.
You should be aware that you may also be eligible for the New York State EITC that is 30% of the Federal rate, and the New York City EITC that is 5% of the Federal Rate.
Another possible source of income from the IRS is the income tax withheld during the year that is shown in Box 2 on your W2(s). Even if you think you do not need to file a return because you did not earn enough money last year, you should file a return if you had too much tax deducted. This is particularly important if you did not work the full year because employers base the income taxes they withhold from your paycheck on an annualized salary. For example, if you are single and earned $400 a week, but only worked for 20 weeks during the year, your annual income would be $8,000 – not enough to file a tax return. However, your employer would have deducted $1,048 in Federal income taxes based on an annual income of $20,800. Federal income taxes due on an annual income of $8,000 for a single person are only $813.00. Therefore, you need to file a return to receive the refund of $235.00 due to you plus the EITC of $349.00 for a total of $584.00. Since the same tax withholding rules apply for New York State, you may have income due from that source also.
There are millions of dollars sitting in the IRS coffers waiting to be claimed. After reading this article, if you think the IRS owes you money, you may file income tax returns for the past three years. Federal Tax Forms are available at all Public Libraries and US Post Offices.
They can also be downloaded from the IRS website – www.irs.gov
New York State forms are available from their offices at 55 Hanson Place, Brooklyn, NY 11217, by calling their toll free number at 1-800-462-8100 or they can be downloaded from their web site at www.tax.state.ny.us
HAPPY FILING!
Peter White is a graduate of the H & R Block training course and has been preparing personal income tax returns for over 20 years. He can be contacted at 212-924-0389 or by e-mail at peterwhite108@aol.com.
