Tuesday, March 2, 2010

Advanced Earned Income Tax Credit

We've already gone over the "Earned Income Tax Credit" (EIC), but now we are going to go yet a step further. Most of us who qualify for the EIC receive it all at one time when we file our taxes. For many, they can qualify to get a portion of this credit during the year in their paychecks...hence the "advanced" in the name.

The first thing is to determine eligibility. You must be expecting to be eligible for EIC, and you must have a qualifying child*. Your earned income must be less than $35,535 (40,545 if you are married filing jointly). Your wages must be subject to federal income tax, social security tax, and medicare tax withholding.
*Qualifying children must meet age, residency, relationship, and joint return test.

If you are married filing jointly, both you and your spouse can receive the advanced credit with the proper document filing with your employers. All rules must still be met. You each would file a W-5 with your employer (HR), for the respective years that you want to receive the advance. If you have more than one employer, only give the W-5 to one employer. The certificate (W-5) is good for one tax year only. You must re-file a W-5 with your employer for each tax year that you want to receive the advance.

Ok...so you've filed, and you've started to receive a little extra with every paycheck; you must file a tax return to declare that you have received that money for that tax season. Your employer will include the advance amount on your W-2 in box 9. You must file a 1040, or a 1040 A....1040EZ is not allowed.

If at anytime during the year your situation changes in regards to household and children and you are no longer eligible to receive the AEIC (Advanced Earned Income Tax Credit), you must file another W-5 and check the appropriate box 1 and turn it in to your employer (HR).

I know this information will help many, many of you. Call for assistance if you need to.

I look forward to being your tax professional. Always affordable tax preparation, always free efile and direct deposit.

Blessings and Prosperity
Wanda E. Green (Uigei)

No comments:

Post a Comment