WASHINGTON – The Internal Revenue Service wants taxpayers with disabilities
and parents of children with disabilities to be aware of the Earned Income Tax
Credit (EITC) and correctly claim it if they qualify.
The EITC is a federal income tax credit for workers who don't earn a high
income ($53,505 or less for 2016) and meet other eligibility
requirements. Because it’s a refundable credit, those who qualify and claim
the credit could pay less federal tax, pay no tax or even get a tax refund.
The EITC could put an extra $2 or up to $6,269 into a taxpayer’s pocket.
Nevertheless, the IRS estimates that as many as 1.5 million people with
disabilities miss out on this valuable credit because they fail to file a tax
return. Many of these non-filers fall below the income threshold requiring them
to file. Even so, the IRS urges them to consider filing anyway because the only
way to receive this credit is to file a return and claim EITC.
To qualify
for EITC, the taxpayer must have earned income. Usually, this means income
either from a job or from self-employment. But taxpayers who retired on
disability can also count as earned income any taxable benefits they receive
under an employer’s disability retirement plan. These benefits remain earned
income until the disability retiree reaches minimum retirement age. The IRS
emphasized that social Security benefits or Social Security Disability Income
(SSDI) do not count as earned income.
Additionally, taxpayers may claim a child with a disability or a relative
with a disability of any age to get the credit if the person meets all other
EITC requirements. Use the EITC
Assistant, on IRS.gov, to determine eligibility, estimate the amount of
credit and more.
People with disabilities are often concerned that a tax refund will impact
their eligibility for one or more public benefits, including Social Security
disability benefits, Medicaid, and Food Stamps. The law is clear that tax
refunds, including refunds from tax credits such as the EITC, are not counted
as income for purposes of determining eligibility for benefits. This applies to
any federal program and any state or local program financed with federal funds.
The best way to get the EITC is to file electronically: through a qualified
tax professional; using free community tax
help sites; or through IRS
Free File.
Many EITC filers will receive their refunds later this year than in past
years. That’s because a new law requires the IRS to hold
refunds claiming the EITC and the Additional Child Tax Credit (ACTC) until
mid-February. The IRS cautions taxpayers that these refunds likely will not
start arriving in bank accounts or on debit cards until the week of Feb. 27.
Taxpayers claiming the EITC or ACTC should file as soon as they have all of the
necessary documentation together to prepare an accurate return. In other words,
file as they normally would.
The IRS and partners nationwide will hold the annual EITC Awareness Day on
Friday, Jan. 27, 2017 to alert millions of workers who may be missing out on
this significant tax credit and other refundable credits. One easy way to
support this outreach effort is by participating on the IRS Thunderclap
to help promote #EITCAwarenessDay through social media. For more information on
EITC and other refundable credits, visit the EITC
page on IRS.gov.
See Also:
- Publication
3966, Living and Working with Disabilities
- Publication
907, Tax Highlights for Persons with Disabilities
No comments:
Post a Comment