The IRS is encouraging those who were effected by last year’s hurricanes; specifically hurricanes Irma, Harvey, and Maria, to see if they meet the requirements for the Earned Income Tax Credit (EITC).
A special calculation, available only to those who resided in one of the hurricane disaster areas during 2017, may allow them to claim the EITC or claim a larger than usual credit. Using this calculation, taxpayers whose incomes dropped in 2017 can choose to use the credit utilizing their 2016 earned income instead of their 2017 earned income. Qualified taxpayers should calculate the credit in both ways; using 2017 earned income and using their 2016 earned income in order to estimate which method will yield the larger EITC.
Eligible taxpayer’s should meet the basic requirements and have earned income from working for someone or being self-employed to qualify for EITC.
Methods of earning an income include: owning a business or a farm, home-based businesses, and or employment in the service, construction and agriculture industries. Certain disability payments may also qualify as earned income for EITC purposes.
The EITC assists working people who don’t earn a high income and meet other qualifications and because it’s a refundable credit, those who claim it may pay less federal tax, pay no tax or even get a refund up to a $6,318. On average, EITC adds almost $2,500 to refunds. However, exact credit amounts vary based on family size and income. Taxpayers without an authorized child who have incomes below $20,600 may also be eligible for a smaller credit of up to $510.
Friday, Jan. 26 the IRS and national partners will hold the annual EITC Awareness Day to alert millions of taxpayers who may be missing out on this and other refundable credits. One easy way to support this outreach effort is by participating in the IRS Thunderclap to help promote EITC Awareness Day.