Earned Income Tax Credit - A Tax Break for Working Families
The Earned Income Tax Credit (EITC) is a refundable tax credit for working families and individuals. It increases the amount refunded to a taxpayer or reduces the amount of tax owed. The amount of the credit varies according to income and family size. In 2010, 26.8 million eligible families and individuals claimed Earned Income credits worth almost $59.5 billion. Yet one out of five households do not claim EITC.
New Jersey wage earners can also take advantage of the state's own EITC program. Residents who are eligible and file for a Federal earned income credit can also receive a New Jersey credit in the amount equal to 20% of their Federal benefit.
Who is eligible? Working parents are eligible for the EITC if their child(ren) lived with them for at least half the year. Foster parents are eligible if their foster child(ren) lived with them for more than half of the year. Wage earners not raising children may also qualify for the federal EITC.
How much? The credit is based on gross earned income, filing status, and the number of any qualifying children in the home.
- Families with one child and had income of less than $36,052 (or $41,132 for married workers) in 2011 can get an EITC of up to $3,094.
- Families with two children and had income of less than $40,964 (or $46,044 for married workers) in 2011 can get an EITC of up to $5,112.
- Families with three or more children and had income of less than $43,998 (or $49,078 for married workers) in 2011 can get an EITC of up to $5,751.
- Workers without a qualifying child in their home, were between ages 25 and 64 on December 31, 2011, and had income below $13,660 (or $18,740 for married workers) can get an EITC up to $464.
Free tax assistance is available to individuals with low or moderate income, seniors, and people with disabilities. Seniors can get tax preparation help at Tax-Aide sites around the state. Other qualifying taxpayers can go to Volunteers in Tax Assistance (VITA) sites. NJ 2-1-1 provides a list of sites. You can also reach the 2-1-1 organization by simply dialing 2-1-1.
For more information about the federal Earned Income Tax Credit call the IRS at 800-829-1040. You can also contact the New Jersey Department of Taxation at 888-895-9179. Tax help is also available from AARP by calling 888-AARPNOW (888-227-7669) or visiting their AARP TaxAide Locations Page.
Another free tax preparation service is the Free File Alliance a free federal tax preparation and electronic filing program for eligible taxpayers developed through a public-private partnership between the Internal Revenue Service (IRS) and the Free File Alliance LLC, a group of private sector tax software companies. Free File allows all taxpayers with an Adjusted Gross Income of $57,000 or less to prepare and e-file their federal tax returns for free.
The IRS has twelve Taxpayer Assistance Centers throughout New Jersey where you can receive help in preparing an individual income tax return, if you qualify for the Earned Income Tax Credit or your income is less than $49,000.
Employers should promote EIC by reading Notice 1015 - "Have You Told Your Employees About the Earned Income Credit (EIC)?" and giving employees a copy.
To get your agency or company involved in promoting these programs, contact the Center on Budget and Policy Priorities at 202-408-1080 or email them to ask them to send you their 2012 Tax Credit Outreach Kit.
Useful web sites to obtain additional information or tax assistance include:
City of Elizabeth
Newark Now
Newark Asset Building Coalition
New Jersey Citizen Action
Greater Trenton EITC and Asset Building Campaign
Internal Revenue Service EITC Home Page
EITC Assistant
IRS Publication 596
NJ 2011 Income Tax and EITC Info
2011 NJ EITC Informational Flyers (color)
2011 NJ EITC Informational Flyers (black and white)
