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Robert W. Davis CPA

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Earned Income Tax Credit for 2011: Do I qualify?

The Earned Income Tax Credit (EITC) is a financial boost for people working hard to make ends meet. Millions of workers may qualify for the first time this year due to changes in their marital, parental or financial status.

The IRS urges everyone earning $49,078 or less from wages, self-employment or farming in 2011 to see if they qualify by using the EITC Assistant on IRS.gov. To get the credit you need to file a return and specifically claim the EITC, even if you aren't required to file.

The EITC is a refundable tax credit. This means you may get money back, even if you have no tax withheld. Nationwide last year, almost 26.8 million eligible individuals and families received over $59.5 billion total in EITC.

Many special rules apply to the EITC. So if you plan to claim it, either on a return you prepare or someone else prepares for you, review the rules carefully. Most people who qualify for the EITC also qualify for free tax preparation through the IRS Free File system, or at a local tax help site staffed by trained community volunteers.

Generally, the EITC has no effect on welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), supplemental nutrition assistance program (food stamps), low-income housing or most Temporary Assistance for Needy Families (TANF) payments. Though unemployment benefits are not earned income, they are taxable and thus affect the amount of EITC you can receive.

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Bob Davis CPA

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Oceanside, CA 92054

(760) 434-7762

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