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The Earned Income Tax Credit

The Earned Income Tax Credit (EIC) is available to low-income workers and their families. Families with one or more children can receive a refund of up to $3,888 from the IRS this year. Here are some facts about the EIC:

bulletChildren must live with their parents for at least six months of the year in order for the parents to claim the EIC. If the children live in Mexico or another country for more than six months of the year, the parents do not qualify for the EIC, even though they can claim them as dependents.
bulletAs of 1996, parents and their qualifying children must be citizens or legal residents of the United States in order for the family to qualify for the EIC. This means that if the mother, father or any of the qualifying children are not properly documented, the family does not qualify for the EIC.
bulletThe EIC is for workers only. Taxpayers whose only sources of income are welfare, unemployment benefits, social security and worker's compensation do not qualify for the EIC, because such income does not come from work.
bulletSingle or married taxpayers between the ages of 25 and 65 with no qualifying- children who earned less than $10,380 can receive a credit of up to $353. Qualified single or married individuals who have not applied for this refund in the past should do so the next time he or she files a tax return.
bulletMarried taxpayers should not apply separately for the EIC. The rules do not allow the husband and wife to divide the children between themselves with each receiving the EIC.
bullet"Married taxpayers filing separately" do not qualify for the EIC. However, legally separated taxpayers can receive the EIC.
bulletTaxpayers have the choice of receiving their EIC refund in their regular pay check or as a lump sum when they file their tax return.
bulletIt is very important that taxpayers choose a tax preparer who knows the tax laws. A tax preparer who does not know the tax laws can cause the taxpayer a lot of problems with the IRS.
bulletAlways make sure that the person preparing your taxes signs your tax form.
bulletSince 2000, parents can get $500 for each child under the age of 17. This new 'child credit" has rules similar to those of the EIC.
bulletBeginning in 2000, a taxpayer who claims the EIC when, in fact, he or she is not eligible to receive it may not be allowed to again claim the EIC for up to 10 years.

Beware of the Rapid Refund

bulletRapid Refund is also known as the income tax refund advance, instant tax refund, instant tax refund loan, quick tax refund, RAL, Refund Anticipation Loans, rapid tax refund, and tax refund loan.
bulletRapid Refunds are easily confused with the actual IRS income tax refunds received from electronic filing with IRS. Rapid Refunds are NOT tax refunds from IRS, they are high interest loans that use your income tax refund to pay off the loan.
bulletThe fees charged for a Rapid Refund are high, so you will end up losing a lot of your tax refund to the Rapid Refund business. For example, if your income tax refund is $1000 you could be charged $70 to receive the money you could get from IRS in three weeks.
bulletATTENTION: If you file electronically, your refund will be sent to you directly in ONLY three weeks.
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