State and federal EITC benefits pay off for lower-wage workers
Plus, starting this week, bonus tips in the Daily Tax Tips weekly roundup
The economy is picking up, but mostly for folks who already are doing OK. Others, however, find that their low-wage jobs don't provide income sufficient to make ends meet.
To help ease some of this income inequality within their borders, 25 states and the District of Columbia have enacted earned income tax credits.
Working families with children earning up to about $39,000 to $52,000 (depending on marital status and the number of children in the family) generally can qualify for a state EITC, according to the Center on Budget and Policy Priorities (CBPP).
However, says CBPP, the largest benefits go to families with incomes between about $10,000 and $23,000.
Workers without children also can qualify for most state EITC, but only if they make very little -- below about $15,000; $20,000 for a married couple -- and the benefit is small.
CBPC reports that fives states -- Illinois, Massachusetts, Minnesota, Rhode Island, and Washington state -- are considering expansion of their EITC programs.
California and Montana are contemplating creation of their own EITC programs.
Wages required: The name of this tax credit -- earned income -- is key at both the state and federal levels. All EITC programs require that the recipients work.
The federal EITC earning limits for 2014 are:
|If filing as...||Qualifying Children Claimed|
|Zero||One||Two||Three or more|
Head of Household
|Married Filing Jointly||$20,020||$43,941||$49,186||$52,247|
You also cannot have more than $3,350 in unearned, that is, investment, income to claim the EITC.
If you do qualify for the 2014 tax year, you can get a tax credit of up to:
- $6,143 if you have three or more qualifying children
- $5,460 if you have two qualifying children
- $3,305 if you have one qualifying child
- $496 if you don't have any qualifying children
You can find out if you qualify by using the Internal Revenue Service's online EITC Assistant.
You also can read more about the federal EITC in today's Daily Tax Tip.
Weekly tax tip roundup: With Tax Day bearing down, we're offering more than just five tax tips each work week. On Tuesdays, Wednesdays and Thursdays until April 15, we'll have two tips.
With IRA contributions the only tax move that most of us can still make for the 2014 tax year, we had a lot of retirement related tips last week. Here is the jam-packed list of tax tips from March 30 through April 3:
- 8 tax breaks that cost Uncle Sam billions (Monday, March 30, 2015)
- Roth IRA rules (Tuesday, March 31, 2015)
- Traditional IRA tax savings (Tuesday, March 31, 2015)
- Retirement savers credit (Wednesday, April 1, 2015)
- Retirement plan contribution limits (Wednesday, April 1, 2015)
- 7-day tax-filing plan (Thursday, April 2, 2015)
- Standard mileage deduction amounts (April 2, 2015)
- Earned income tax credit (EITC) (Friday, April 3, 2015)
As always, you can find the Daily Tax Tip each week day in the upper right corner of the ol' blog's home page.
Then at the end of the week -- generally on Friday, but sometimes it slips to Saturday -- check back to find all five eight tips in a round-up post.
Check them out if, like me, you're still working on (or planning to work on) your 2014 tax return.
And hang in there. Most of us are almost done with the 2015 filing season.