The Earned Income Tax Credit (EITC) is a wonderful tax credit for low income workers, since it has a goal of getting children out of poverty. The good news is it will be continuing into 2016 even though last year it is said only 70% of those who qualified claimed it. This is a refundable tax credit, which means when tax payers claim this credit it usually results in them getting a refund.
President Obama’s thoughts on the Earned Income Credit
President Obama wants to expand the EITC so it is available for those who do not have children and the non-custodial parents as well. As a result he feels that poverty and hardship for 13.2 million low income workers will decrease. His plan is to double the EITC for those who do not have children, increase the phase out income bracket, and make it so anyone over the age of 21 who qualifies can claim it.
Currently, the EITC and CTC are expected to expire at the end of 2017. This means that full time minimum wage workers with two children will see their taxes increases by approximately $1,700. Research has also proven that when parents get the EITC and CTC parent’s employment rates skyrocket, poverty is reduced, and the children are healthier and better educated. Before these new changes happen Congress also has to agree to it.
American taxpayers will be able to file their taxes soon so don’t miss out on claiming this valuable tax credit. It just might mean an extra $2,000 or more in your pocket. Few other tax credits can earn you that kind of money! The Earned Income Tax Credit Table will show you how much of a credit you may qualify for.
President Obama is also suggesting other tax credits
The middle class are looking at more tax breaks at the expense of the richest American taxpayers. Recently the Democratic House Rep, Chris Van Holllen, released a $2000 middle class paycheck credit bonus. Obama is also suggesting:
- Raising the top tax rate on capital gains and dividends to 28%.
- Imposing a capital gains death tax to address one of the loopholes related to asset transfers during death. Currently, assets that are held until death are exempt from capital gains, which means heirs only have to be taxed when they sell the assets and profit from doing so. Obama is proposing that the first $200,000 or $500,000 for couples should be exempt, but the rest needs to be taxed as it would be if it were sold.
- A $500 second earner working tax credit for married filers when they both are employed. This credit would phase out if the income is more than $210,000.
- Tripling the maximum child care tax credit to up to $3,000 for children younger than 5. This would mean some parents would be getting half of their first $6,000 of child care per child taking care of. This is the prime example of how Obama is trying to increase taxes for the wealthy so they are funding tax breaks for middle and lower class families.
Some of these credits do have to have bi-partisan support, however, there is a good chance of Congress agreeing on these changes this year.
Claiming the Earned Income Credit
Keep in mind, if you file online with H&R Block they will ask you the correct questions to let you know which deductions you qualify for and guarantee you will receive the largest refund ever. Their online filing services have the ability to import your W2 information into your tax return so you can avoid worrying about your forms being delivered via snail mail. You can also use their free tax refund estimator to see how much of a refund you can expect.