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Advance EITC payments Tips on what to do with your refund Advance Earned Income Tax Credit payments allow eligible An Earned Income Tax Credit refund can help you to: workers to receive part of their credit in their paychecks • • throughout the year and part of the credit in a check from the IRS after they file their tax return. Advance payments Open a checking account*. Jump-start your savings* - an important step toward being able to build assets and realize your financial goals. are not considered taxable income. There are several ways to do this: To find out more about how you may be able to take – Deposit the refund into a savings account (e.g., advantage of this payment option, check with the IRS Statement Savings, Club Account, Money Market, for eligibility requirements and tax filing guidelines. Certificate of Deposit). Important! Workers who get the Advance Earned Income – Deposit the refund into an Individual Development Tax Credit payments during the year must file a completed Account (IDA) - a specialized matched savings account tax return and Schedule EIC at the end of the year. The Earned Income Tax Credit Special tax credits for people who work to help lower-income wage earners build their assets more quickly. When you open an IDA, the money must Where to get more help be used for a specific purpose. Allowable purposes For more information on the EITC eligibility requirements, start-up, or a down payment for a home. Contact refer to IRS Publication 596, “Earned Income Credit.” All local community action agencies, community forms are available for free by calling 1-800-TAX-FORM, development financial institutions (CDFIs), credit or can be downloaded from the IRS Web site at unions, or bankers to see if they know of any IDA www.IRS.gov/eitc. programs in the area. include: job training, college education, small business – Invest the funds in stocks, bonds, mutual funds or Tax preparation help is also available at no cost at in a savings plan (e.g., for college or retirement). Volunteer Income Tax Assistance (VITA) sites or Tax Counseling for the Elderly sites (TCE). Call 1-800-TAX-1040 or 1-800-829-1040 to find the closest VITA or TCE site. • • • Help finance the purchase of a home. Pay down your debts. Purchase necessities or something special for you or your family. Put more money in your pocket - You may be eligible for up to $4,536 in additional refunds through the Earned Income Tax Credit. Find out more about: For information on budgeting, savings, buying a home, credit management or other financial information, please refer to the Chase Financial Education Library at www.chase.com/financialeducationlibrary. For Chase product information, refer to www.chase.com or call 1-800-CHASE24. © 2007 JPMorgan Chase & Co. All rights reserved. *Note that you can now opt to direct deposit your refund into one account or split your refund among two or three checking or savings accounts with U.S. financial institutions. Both savings and checking accounts enable the tax filer to receive tax benefits electronically within 10-14 days of filing the tax return. • How you may qualify for the Earned Income Tax Credit • Where to get help filing your tax return • Tips on what to do with your refund What is the Earned Income Tax Credit? The Earned Income Tax Credit (EITC) is a refundable federal and state (where applicable) income tax credit for U.S. citizens or resident aliens who work, but with earned incomes below a certain amount. A tax credit means more money in your pocket. It reduces the amount of tax you owe and you may also get a refund. Can workers without children claim the credit? Yes. Very low-income workers who are not raising children in their home are eligible for a small credit if in 2006: Taxpayers claim the Earned Income Tax Credit by filing a federal and state (if applicable) income tax return as follows: • Earnings were less than $12,120 ($14,120 for married workers). • • The worker was at least 25 and under age 65 on December 31, 2006. Workers raising a “qualifying” child in 2006 must file either Form 1040 or 1040A and must fill out and attach Schedule EIC. Married workers must file a joint return to get the Earned Income Tax Credit. • Workers who were not raising a “qualifying” child in their home in 2006 can file any tax form, including the 1040EZ. These workers do not need to fill out and file a separate Schedule EIC. What is earned income? Earned income includes wages, salary, tips, other taxable employee compensation, and net earnings from selfemployment. Who is eligible to claim the credit? Single or married people who worked full time or part time at some point in 2006 can qualify for the EITC, depending upon their income. Even workers whose income was too small to owe income tax can get the EITC. A worker may qualify for an Earned Income Tax Credit if in the 2006* tax year: • Earned income was less than: Qualifying children Qualifying children includes: • Sons, daughters, stepchildren, grandchildren and adopted children. • Brothers, sisters, stepbrothers, or stepsisters - if they were cared for as family members. • Foster children who are placed with the worker by an authorized government or private placement agency. Qualifying children must live with the worker for more than half the year and they must be under 19 years of age (or under age 24 if they are full-time students). Totally and permanently disabled children of any age may also be qualifying children. – $36,348 ($38,348 if married and filing jointly) and there was more than one qualifying child. – $32,001 ($34,001 if married and filing jointly) and there was one qualifying child. – $12,120 ($14,120 if married and filing jointly) and there was no qualifying child. • The worker was a U.S. citizen or resident alien or married to a U.S. citizen all year. *The IRS adjusts income eligibility each year. How much is the credit worth? Benefits can range from $412 to $4,536. The value is based on the earnings and number of children raised by the worker. How to claim the credit Are immigrant workers eligible to claim the credit? All claimants listed on the tax return must have a valid Social Security Number. Note: Taxpayers can either calculate their own Earned Income Tax Credit or have the IRS do it for them. How does the EITC affect other benefits received? In most cases, Earned Income Tax Credit payments will not be used to determine eligibility for benefits like Medicaid, Supplemental Security Income (SSI), food stamps, subsidized housing, or most Temporary Assistance for Needy Families (TANF) payments. People who earn wages and also receive welfare benefits can still qualify for the EITC as long as they meet the income and other eligibility requirements. Yes. Many documented immigrants can qualify for the Earned Income Tax Credit if they meet the eligibility requirements for income and qualifying children. All claimants listed on Schedule EIC must have a valid Social Security Number and permission to work legally in the United States. The worker must also be a “resident alien for tax purposes” for the entire tax year and the main home must be in the United States. Acknowledgements: Portions of material covered in this brochure were replicated with permission from The Center on Budget and Policy Priorities Web site and from the Internal Revenue Service (IRS) Web site.