IRS Urges Taxpayers to Review EITC Eligibility
IR-2004-12, Jan. 20, 2004
WASHINGTON — The Internal Revenue Service today urged working taxpayers with low incomes to review their eligibility for the Earned Income Tax Credit to see if they qualify for tax relief. This year, the IRS and 14,000 volunteer sites are available to help taxpayers figure out their eligibility.
The IRS receives the majority of EITC claims in February, usually after workers receive their Forms W-2. EITC recipients may also qualify for free tax preparation and e-filing through Free File, which is located on IRS.gov.
“This is an important program, and you should check to see if you qualify," said IRS Commissioner Mark W. Everson. “EITC rules can be complicated so you should carefully review the qualifications. Know, don’t guess, if you are qualified. If in doubt, contact the IRS or its volunteer partners for help. If someone prepares your taxes, seek out a reputable professional who understands EITC rules and who will avoid common mistakes.”
EITC eligibility rules can be found in Fact Sheet 2004-8, in Publication 596 and through links at 1040 Central on IRS.gov. For tax preparers, there is a new EITC information kit online and a new EITC tool kit in Publication 3107E.
For the 2003 tax year, income limits have increased. Taxpayers must earn less than $33,692 if they have two or more qualifying children, $29,666 with one qualifying child or $11,230 if there are no children. Income limits are $1,000 higher if a couple’s filing status is married filing jointly.
The maximum refundable credit for the 2003 tax year is $4,204 for a family with two or more qualifying children, $2,547 for a family with one qualifying child and $382 if there are no qualifying children. Many taxpayers qualify for less than the maximum, depending on their income.
The IRS also reminded military families that many of them may also qualify for EITC because supplemental payments and combat pay are exempt from the income calculations.
The EITC was enacted in 1975 to offset federal taxes paid by low-income wage earners and to serve as a work incentive. Last year, more than 20 million taxpayers collected more than $36 billion in EITC payments.
The IRS is broadening its outreach to EITC claimants in an effort to maximize participation and minimize errors on tax returns. The IRS is taking several steps, including:
Working with more than 180 community-based organizations nationwide to reach low-income workers who may be unaware of the EITC availability;
Helping set up 14,000 volunteer centers that offer free tax preparation for low-income and elderly individuals. Times and locations of these volunteer centers are publicized locally;
Coordinating with mayors’ offices nationwide to help identify low-wage earners who may qualify for EITC;
Teaming with a special grassroots cadre in two target cities — Los Angeles and Miami — to reach out to taxpayers who have limited proficiency in English but who may qualify for EITC; and
Providing additional EITC tools to tax practitioners who must perform due diligence when preparing tax returns.
The IRS also has consolidated all EITC management activities within a single EITC office. The office will coordinate EITC program administration in an effort to improve the accuracy of tax returns and to improve the agency’s internal processing procedures.
EITC claimants also are urged to consider electronic filing, especially through Free File which will offer free tax preparation and e-filing to millions of taxpayers. Free File will be operational in mid-January. E-filing, either through Free File or through a tax professional, will help reduce math errors that can delay a refund. Taxpayers who e-file and use direct deposit will receive their refund in two weeks or less.
Fact Sheet 2004-8 — IRS Outlines EITC Eligibility for 2003 Tax Year
Earned Income Credit — links for taxpayers and preparers
Online EITC Toolkit for Tax Preparers
1040 Central — Information to help you with your 2003 return