Earned Income Tax Credit - A Tax Break for Working People
The Earned Income Tax Credit (EITC) is a refundable tax credit for families and individuals who have income from employment. It increases the amount refunded to a taxpayer or reduces the amount of tax owed. However, you must file a tax return to 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 earned income credit in the amount equal to 35% of their federal earned income credit.
The credit is based on gross earned income, filing status, and the number of qualifying children in the home. To qualify, your earned income and adjusted gross income (AGI) must be less than:
- $48,340 ($53,930 if married and filing jointly) with three or more qualifying children;
- $45,007 ($50,597 if married and filing jointly) with two qualifying children;
- $39,617 ($45,207 if married and filing jointly) with one qualifying child;
- $15,010 ($20,600 if married and filing jointly) with no qualifying children.
For tax year 2017, you could receive a maximum federal credit of:
- $3,400 with one qualifying child;
- $5,616 with two qualifying children;
- $6,318 with three or more qualifying children;
- $510 with no qualifying children.
Free tax assistance is available to individuals with low or moderate income, seniors, and people with disabilities. Seniors can get tax preparation help at AARP Foundation Tax-Aide sites around the state. Other qualifying taxpayers can go to Volunteers in Tax Assistance (VITA) sites. The NJ 2-1-1 Partnership maintains a list of free tax assistance locations. You can also reach the NJ 2-1-1 Partnership by dialing 2-1-1. You can also use the IRS search tool or by calling 800-906-9887.
The Free File Alliance is a public-private partnership of the Internal Revenue Service (IRS) and the Free File Alliance LLC, a nonprofit coalition of leading tax software companies. Taxpayers with an Adjusted Gross Income of $66,000 or less can visit IRS Free File to prepare and file their federal return at no cost.
Other useful web sites for EITC information include:
NJ Free Tax Assistance Locations (VITA and AARP Sites)
IRS Get Free Tax Prep Help
EITC Outreach Strategies - targeted to nonprofits
Internal Revenue Service EITC Home Page
IRS Publication 596 - "Earned Income Credit"
IRS Notice 797 - "Possible Federal Tax Refund Due to the Earned Income Credit (EIC)"
IRS Notice 1015 - "Have You Told Your Employees About the Earned Income Credit (EIC)?"
NJ Division of Taxation Statement to Employees
NJ 2017 EITC Fact Sheet