Business : Many May Overlook Valuable Tax Credit

More workers could be eligible for a special tax credit this year and not know it. As a result, they may overlook claiming the Earned Income Tax Credit, or EITC, which can put anywhere from $2 to more than $5,600 into their pockets.

People move into and out of EITC eligibility based on changes in their earnings, their parental status or their marital status according to Phyllis Zalenski, Family Resource Management Program Specialist, Iowa State University Extension. "Many people will qualify for the first time this year due to economic changes in their incomes."

She encourages anyone who earned $48,362 or less from wages, self-employment or farming in 2010 to see if they qualify. Eligible workers can get their EITC only if they file federal income tax returns - even if they are not otherwise required to file - and specifically claim the credit.

"IRS estimates four out of five eligible workers claim their EITC. We want to raise that to five out of five, " Zalenski said. "You earned it. Now file, claim it and get it."

Taxpayers have several choices for free help determining their EITC eligibility and claiming the credit. Many communities have volunteer income tax assistance sites. To locate a site, call 211 for local services or call the IRS at 1-800-906-9887. Help also is available at IRS Taxpayer Assistance Centers. Locations are online at www.irs.gov.

To help accurately determine their EITC eligibility and prepare their returns, individuals should bring:

• Photo proof of identification
• Social Security cards for themselves, their spouse and dependents or Social Security number verification letters issued by the Social Security Administration
• Birth dates for all persons listed on the tax return
• Wage and earning statement(s) Forms W-2, W-2G, and 1099-R, from all employers
• Interest and dividend statements from banks (Forms 1099)
• Copies of last year's federal and state returns, if available
• Bank routing and account numbers for direct deposit of their refunds
• Other relevant information about income and expenses
• Amounts paid for day care, if applicable and the day care provider's identifying number.

To electronically file their returns and get the fastest refunds, both spouses must be present to sign joint returns.

"EITC is a financial boost for working people hit by hard economic times. This is money that can make their lives a little easier, especially families with three or more children who get an extra boost with a larger credit this year," Zalenski said.

Contact: Phyllis Zalenski, Family Resource Management Specialist

Iowa State University Extension

(319) 462-279