The Tax Break That Millions Miss Out On

Tax breaksThere's a popular tax break out there that paid more than 26 million workers a total of nearly $59 billion last year. Yet as many as 1 in 4 of those who qualify for this tax credit failed to claim it, missing out on hundreds, or even thousands, of dollars.

That break is the earned income tax credit. Designed to help low- and middle-income wage earners make ends meet, the credit helps reverse the effect of payroll taxes. Despite the best efforts of community organizations and various government agencies, however, the credit doesn't reach some of the families who need it most.

What You Need to Know

The earned income tax credit covers families of various sizes, with different income limits and credit maximums. Joint filers with three or more children are eligible if they earn less than $49,000, with a maximum credit of about $5,750. Smaller families have slightly lower income limits and credit amounts, and even if you don't have any children, you may be entitled to up to $464 if you earn $13,660 or less and are single or $18,740 for married couples.

The key to the earned income tax credit is that you have to have income from a job or business. Interest and dividends, Social Security payments, and unemployment benefits don't count for claiming the credit.
Sponsored Links

But what many don't realize is that you can get cash back from the credit even if you don't owe tax. That's unusual for a credit, but it's what makes the earned income tax credit especially valuable for those who are struggling to make ends meet.

The problem with the credit is that it's fairly complicated, with various rules that can make it hard to figure out if you're actually eligible. But with that in mind, the IRS set up a quick eligibility quiz. Of course, many low-income taxpayers don't have access to computers, so getting everyone eligible to claim the credit will continue to be difficult.

Get What You Deserve

So be sure to check and see if you're eligible for the earned income tax credit. In tough times, some extra money can make all the difference.

More on taxes:




Tax Breaks and Home Ownership

Home ownership brings with it not only many trips to home improvement stores, but also a slew of tax breaks. It's up to you to take full advantage of the write-offs available to you. Here's what you can and can't deduct.

Read More

Brought to you by TurboTax.com

Sending Kids to College

TurboTax can help you take advantage of tax breaks to ease the financial burden of sending kids to college, including tax credits, tuition deductions, tax-free savings and more.

Read More

Brought to you by TurboTax.com

Tax Aspects of Home Ownership: Selling a Home

Though most home-sale profit is now tax-free, there are still steps you can take to maximize the tax benefits of selling your home. Learn how to figure your gain, factoring in your basis, home improvements and more.

Read More

Brought to you by TurboTax.com

How to Avoid Taxes on Canceled Mortgage Debt

If you lost your principal residence to a foreclosure or short sale, TurboTax can help you deal with the tax implications, including recent tax law changes that can offer some relief.

Read More

Brought to you by TurboTax.com
Read Full Story
Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.