1. What is the Earned Income Tax Credit (EITC) and how do I know if I qualify?
The United States federal Earned Income Tax Credit (EITC or EIC) is a refundable tax credit that helps working people with limited income. Essentially, the EITC helps you pay less in payroll taxes.
Your earned income and adjusted gross income (AGI) must each be less than the following amounts:
|Number of Qualifying Children||Single||Married Filing Jointly|
|3 or more||$45,060||$50,270|
2. How can I estimate my tax refund?
How much money you get back depends on two major factors: your income and how many dependents you have. You can use this free tax refund calculator to get an estimate of your refund or the amount you’ll owe. Make sure you stay away from "Tax Refund Loans" which charge very high rates.
3. I recently bought a home. Can I claim the homebuyer tax credit?
Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit:
The credit is claimed using Form 5405, which you file with your original or amended tax return. Find more information on the homebuyer’s tax credit.
4. I’m a waitress and I made less than $16,000 in 2012. Do I still have to file a tax return?
This depends in part on your filing status, age, and gross income. If you are single, you must file a tax return if your gross income was at least $9,500 ($19,000 if married and filing jointly). That said, there is little harm in filing, especially because a full 50 percent of the people who chose not to file would have received money back! Find more information on filing here.
5. I owe money on my income taxes from last year. Can I still get a tax refund this year?
If your account is current, and you’ve been making your payments on time, you will still get your tax refund. However, if your account is past due, you may not get your refund. Your refund this year is not a substitute for your payments owed from last year. If you owe any federal tax, state tax, student loans, or child support, your refund may be withheld. The IRS will most likely automatically apply your refund to any past due amounts.
6. My daughter is 26, just finished community college, and is living at home with me until she gets a job. Can I still claim her as a dependent?
Your daughter, despite being unemployed, doesn't automatically qualify as a dependent. Although there are some exceptions, your child must meet the following conditions in order to be considered a dependent:
7. My friend isn’t getting a refund in cash, instead she is investing it and even getting savings bonds. Why wouldn’t I want a cash refund? And, is it true that I can purchase savings bonds with my refund?
Well, while a cash refund might be your best option if you have high interest credit card debt to pay off, or if you have little in your savings account, your money will do a lot more for you if you invest it. You can invest your refund in a lot of different ways.
Since 2010, you CAN use your tax refund to invest in savings bonds. Learn more about savings bonds and other options to save and invest your money.
8. I pay child support. Does that affect my taxes in any way?
No, child support cannot be claimed by either parent. However, if your child lived with you for the greater part of the year and you are the custodial parent, you can generally claim the exemption for the child.
9. I've heard a lot about phishing on the Internet. What should I be aware of during the tax season?
Phishing is an online con game where Internet criminals, called phishers, try to steal your identity by sending an e-mail claiming to be real business and asking you to give up private information. IRS impersonation schemes flare up during tax season, so it’s important to be aware and to be informed. Scams also take place by phone, fax, Internet sites, social networking sites, but mostly by email. The IRS never sends taxpayers unsolicited emails about their tax accounts, tax situations or personal tax issues. If you receive an email, it’s probably a scam. For more information, check the official IRS site for scams and consumer alerts. To learn more about phishing, visit our Internet Safety section: