In the current economic downturn increasingly more families are experiencing troubles making ends meet. The worse off are extremely close to poverty and need urgently to find some help. A lot of these troubled households are not aware of all the sources of possible additional income available to them. One avenue that many people in financial trouble overlook is the Earned Income Tax Credit (EITC) which is overseen by the federal government.
Originally created in the mid seventies, the EITC program is now one of the main anti-poverty programs in the U.S. - and yet very few people know much about it or how it can help them. Every year, millions of available dollars in the program go unclaimed, even though thousands of families would qualify for the program if they knew of it. In fact, according to the IRS, many families could increase their net income by 30% by taking advantage of the Earned Income Tax Credit.
The Earned Income Tax Credit is a refundable federal income tax credit for low and moderate income working families. It was created primarily to reduce the amount of taxes paid by the working poor in an effort to help them to move towards income self-sufficiency. If a family qualifies, they could be eligible for a tax reduction as well as supplemental dollars.
The main criteria for qualifying is that the family's income must be "earned", hence the name of the program. You must be employed by a company and earn wages. In other words, if your income is based primarily on interest from investments, stock dividends, and so on, you probably do not qualify. Your qualification is also based on how many dependents you support. But, since the rules periodically change, it's best to check with a tax professional to determine if you currently qualify. Alternatively, their are websites that you can go to that contain calculators you can use to determine if you qualify for the Earned Income Tax Credit and, if so, how much.
There are additional rules as well. In fact, one of the main barriers to applying for the EITC is that through the years, the application process has become so byzantine and complex that thousands of families that do know about the program either don't try or give up in frustration after trying a few times.
But there are independent organizations out there that will help families to apply for an EITC. One such organization is the United Way. Many of their local offices will provide free tax preparation and access to the Earned Income Tax Credit and other tax credits to help working families increase their incomes and create savings.
The program is a win-win for many states as well. By taking advantage of the EITC, families are less likely to become homeless which would push the burden of caring for them to the states. In addition, the EITC helps to provide an economic stimulus to local communities. The Earned Income Tax Credit money that the homeowners receive is almost certain to be spent in the local stores, banks, restaurants, and so forth.
The EITC program can potentially be a life saver for many families that are barely surviving week to week. Even if you applied for it a year or two ago and were rejected, its worth trying again. Your circumstances may have drastically changed so that now you are eligible for the program.
Artice Source: http://www.articlesphere.com
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