Hurricane victims may qualify for earned income tax credit
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.
Alabama tax refunds could come late for half a million residents
Some households may find themselves waiting a little longer for their tax refunds next spring. Due to an IRS procedural change, households that file early and claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit will not see their refunds until after Feb. 15. The Internal Revenue Service said the delays are the result of a new anti-fraud regulation that will take effect in 2017. The rule will give the agency more time to identify and eliminate fraud in both programs. These changes are a result of the passage of the Protecting Americans from Tax Hikes Act of 2015. While the majority of the law simply makes some temporary tax credits permanent, other portions of the bill attempt to crack down on what some investigators have called a “formula for fraud.” In 2014, 27.5 million Americans — and roughly 507,000 Alabamians — filed for the EITC. In Alabama, the EITC average return amount was $2,784, which came in above the national average of $2,400. ”This is an important change to be aware of for some taxpayers used to getting an early refund,” said IRS Commissioner John Koskinen. “We’ll be focusing on awareness of this change throughout the fall, but it’s important for taxpayers who might be affected by this to be aware of the change for their planning purposes. Although we still expect to issue most refunds within 21 days, we don’t want people caught by surprise if they get their refund a few weeks later than previous years.” The IRS usually issues refunds within 21 days or less after processing begins on a return. The agency began accepting returns Jan. 19 this year. “These increased security screenings are invisible to most taxpayers,” Koskinen continued. “But we want people to be aware we are taking additional steps to protect taxpayers from identity theft, and that sometimes means the real taxpayers face a slight delay in their refunds. As we continue improving our processes and working with the states and the tax industry, we will stop more fraud while also fine-tuning our tools to reduce the number of innocent taxpayers who might see a refund delay. “
