EITC Questions

 

1. Is there an Earned Income Tax Credit for North Carolina?

Yes. For the first time, North Carolina now offers a State Earned Income Tax Credit (NC-EITC), which may provide extra money for North Carolinians who work, meet the criteria for the federal EITC, and file both a federal and State income tax return.

The NC-EITC is a refundable credit, which means it is extra money an eligible person may receive in addition to a regular tax refund. In the case of a person who owes state income taxes, the EITC may reduce that person’s tax bill. Qualifying individuals may receive as much as $169 from the State.

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2.  Am I eligible for the Federal Earned Income Tax Credit?

Taxpayers who earned income in 2009 may be eligible for the credit. It depends on how many people are in your family and how much money you earn. There are also different rules for taxpayers without children, taxpayers who have one qualifying child, and taxpayers who have two or more qualifying children.

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3.   What is a Qualifying Child?

You do not need to have children to get the EITC but the number of children that you have affects your eligibility and the amount of your refund. Only a "qualifying child" can be counted towards your EITC.

A "qualifying child"  must be either a son, daughter, stepson, stepdaughter or a child of any of them or a brother, sister, stepbrother, stepsister or a child of any of them, whom the taxpayer cares for as his/her own child or an eligible foster child.

A qualifying child must be either:

  • Pointer Under the age of 19 at the end of the tax year; or
    Pointer Under the age of 24 and a full-time student at the end of the tax year; or
    Pointer Any age and permanently and totally disabled at any time during the year.

Any qualifying child must have lived with the taxpayer in the United States for more than half of the tax year.

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4.   What are the rules for people with no children?

To be eligible for the federal Earned Income Tax Credit, a person with no children must:

  • Pointer Have a valid Social Security Number
    Pointer Have a filing status of single or married filing jointly
    Pointer Have earned at least $1 but less than $13,440 (single) or $18,440   (married filing jointly)
    Pointer Have investment income of less than $3100
    Pointer Have lived in the United States for more than half of the year
    Pointer Be between aged 25 and 65 on December 31, 2009.

You cannot be the dependent or qualifying child of any other person. You also cannot be filing IRS Form 2555 or IRS Form 2555-EZ for foreign income.

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5.  What are the rules if I have one qualifying child?

To be eligible for the federal Earned Income Tax Credit, you (and your spouse if filing jointly) must:

  • Pointer Have valid Social Security Numbers for yourselves and the qualifying child
    Pointer Have a filing status of single, head of household or married filing jointly
    Pointer Have earned at least $1 but less than $35,463 (single) or $40,463   (married filing jointly)
    Pointer Have investment income of less than $3100
    Pointer Have lived in the United States for more than half of the year
    Pointer Be between aged 25 and 65 on December 31, 2009.

Your child must meet the age, residency and relationship tests for a qualifying child. Your child cannot be the qualifying child for anyone else.

You cannot be the dependent or qualifying child of any other person. You also cannot be filing IRS Form 2555 or IRS Form 2555-EZ for foreign income.

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6. What are the rules if I have two qualifying children?

To be eligible for the federal Earned Income Tax Credit, you (and your spouse if filing jointly) must:

  • Pointer Have valid Social Security Numbers for yourselves and the qualifying   children
    Pointer Have a filing status of single, head of household or married filing jointly
    Pointer Have earned at least $1 but less than $40,295 (single) or $45,295   (married filing jointly)
    Pointer Have investment income of less than $3100
    Pointer Have lived in the United States for more than half of the year
    Pointer Be between age 25 and 65 on December 31, 2009.

Your children must meet the age, residency and relationship tests for a qualifying child. Your children cannot be the qualifying children for anyone else.

You cannot be the dependent or qualifying child of any other person. You also cannot be filing IRS Form 2555 or IRS Form 2555-EZ for foreign income.

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7. What are the rules if I have three or more qualifying children?

To be eligible for the federal Earned Income Tax Credit, you (and your spouse if filing jointly) must:

  • Pointer Have valid Social Security Numbers for yourselves and the qualifying   children
    Pointer Have a filing status of single, head of household or married filing jointly
    Pointer Have earned at least $1 but less than $43,279 (single) or $48,279 (married filing jointly)
    Pointer Have investment income of less than $3100
    Pointer Have lived in the United States for more than half of the year
    Pointer Be between age 25 and 65 on December 31, 2009.

Your children must meet the age, residency and relationship tests for a qualifying child. Your children cannot be the qualifying children for anyone else.

You cannot be the dependent or qualifying child of any other person. You also cannot be filing IRS Form 2555 or IRS Form 2555-EZ for foreign income.

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8. I don’t want to lose my benefits. Will getting EITC affect my public benefits?

No. Getting the federal or state Earned Income Tax Credit will not affect your WorkFirst, food stamp or medical benefits.

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9. I think I may have been eligible for EITC last year but I didn't file a tax return. Is it too late?

No. Many people do not know about the credit so they do not claim it on their tax return. If you were eligible but did not file for the credit before, you can still claim the credit now. You have up to 3 years to file for the credit.

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The materials contained on this website are for information and educational purposes only and do not constitute legal advice.  Also please note that Legal Aid of North Carolina does not provide legal assistance by E-mail. Contact your Legal Aid of North Carolina office or a private attorney if you need to speak to an attorney regarding your particular situation.
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Legal Aid of North Carolina is a statewide, nonprofit law firm that provides free legal services in civil matters to low-income people in order to ensure equal access to justice and to remove legal barriers to economic opportunity.

 

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