Things You Need to Know About Tax Credit
The good thing about tax credit is that it has the ability to increase your tax refund. Thus, as a taxpayer, it is important that you are aware of the qualifications for this tax credit. To help you out, here are some of the eligibility concerns about tax credit.
The only eligible are the low to moderate-income earners
The EITC or earned income tax credits are only limited to low to moderate-income earners. Basically, taxpayers should file as individuals or married filing jointly. Taxpayers should also be 25 years old or more but should not be over 65 years old. Despite the eligibility of low to moderate income earners for the EITC, there are still other factors for consideration like the filing status, variation of income and the number of qualifying dependents that affect eligibility.
Self-employed individuals are also qualified
One of the misconceptions of people when it comes to EITC is that only employees are qualified. But the truth is, even the self-employed ones are eligible. The IRS considers all income that is earned for the credit. The factors considered in this aspect are tips, wages, salaries, long-term disability benefits, net earnings, and gross income.
Investment income may lead to disqualification
If you have other income aside from your regular work like investment income, you may not be qualified for EITC. This only applies when your investment income is greater than 3,600 dollars every year. Investment incomes also include dividends, stocks, inheritance and rental properties.
Changes in Eligibility
Taxpayers must be aware that the EITC eligibility may change every year. Some of the factors that might affect your qualification include change in marital status, new job, employment situation, unemployment etc. Thus, always check on some tax preparation Roseville tips to be informed.