Earned Income Credit 2011
Governments across the world have placed different policies to try and support citizens who are earning lesser than the less. In a way, this is the government’s way to bring up the nation’s standard of living as a whole. Why the government has to do this is simple. The government, dictator, ruling monarch of the country has been endowed with certain responsibilities. Amongst these responsibilities are citizen well-being and overall development of the country. It is quite ridiculous for the entire country to develop, technological advancements to surpass the rest of the world’s expectations and still have families and individuals who cannot afford to spend on anything but necessities forget about maintain a high standard of living. More advancements and progress in turn lead to inflation. This causes necessities to be even more expensive than they already are. Lower income families face an even harder crisis. It is, in a way, a vicious cycle.
Multiple policies have been placed over time. Examples of policies that received lukewarm response have been ration cards, loans on lowered interest, micro financing and housing policies. Ration cards have lasted the longest but are regarded as derogatory in nature. These cards entitled the holder to free or subsidized rations. However, holders of these cards were easily identified by society as “less-fortunate” or simply not so well off. This encouraged the rift between the upper and lower classes of society. Policies that involved loans and micro financing encouraged living off debt. This has been seen as a great disaster to the country’s economy in the long run. Perhaps one of the most successful policies embraced by governments across is the refundable tax credit policy. This has certainly been the most widely accepted. There are quite a few types of refundable tax credit policies that cover all types of schemes such as the earned income tax credit, the homebuyer credit, the health coverage credit and the adoption tax credit.
The earned income tax credit is a policy by the government that allows lower income working families to reduce the amount of tax filed by them according to the number of dependents that they have. The government recognizes that after filing taxes, the income of these families decrease to such a degree that sustaining a family is practically impossible. Also, it has been observed that lower income families tend to usually have a single bread winner and many dependents due to larger families and stay at home spouses. This makes the earned income tax credit policy a boon to such families.
There is a difference between the earned income credit policy and the child tax credit. In the earned income credit policy, tax refunds are issued specifically for lower income families whose incomes do not meet a certain given level prescribed by the government. The main aim for this type of policy is to ensure that lower income families are able to sustain their daily lives. Tax rebate would be given whether or not the family has dependent children, but the amounts will vary.
For child tax credit however, tax rebate is given only, and only if there is a child who is under the age of 17 living in the household. A maximum amount of US$1000 is bestowed for each child and there is no minimum income amount. However, there are maximum income amounts after which the rebate amount starts to decarese.
Now, the first thing that any family should be aware of is if the family is applicable to apply for the earned income tax credit policy. Information about the same is available through quite a few sources. There are a few categories of questions you might have to look in to;
- How much is your earned income and how much is your adjusted gross income?
First and foremost, the basic criterion for applying for applying for the earned income credit policy is that your income should meet a few income standards. Both gross income and adjusted gross income should be below the cut-off levels provided by the government. The income declared in this policy is joint income of the household; this would cover both spouses income. Gross income stands for aggregate total income that comes in from the household. Adjusted gross income stands for gross income tax after deduction of 23 specific items that have been filed and declared by the federal government.
For the earned income credit policy 2011, the government has increased the basic amount of income required to qualify families. There has been a jump of over $500 for nearly every category.
Another difference that has happened in the year 2011 is that the government has created another category for families with above 3 children. Previously, the maximum amount of benefit went for 2 and above number of children. Now, the amounts for 2 children and 3 are different.
A quick graph of 2011 amounts is below;
|Amount for single person filing||Amount for married and joint filing||Number of qualifying children|
|$43,998||$48,362||3 or more|
- Are your children qualified for the earned income tax credit policy?
Your child may be your dependent, but he may not qualify you for a tax rebate. Be sure to check with the following before signing up for earned income credit 2011. Enlisted here are basic criterions that have to be satisfied;
1. The child must be related to you by blood or a legal arrangement if he/she is adopted or a foster child.
2. The child must be 18 years old and below. If he is a full time student, the claim can be taken for a child up to 23 years old.
3. If the child/person is permanently and completely handicapped, the claim can be made regardless of age.
4. The child must live within your residence, in the United States, for atleast six months and a full day.
5. Your child must have a valid social security number.
It is important that the criteria are met and that no other person is filing the earned income credit for the same child.
- Are you meeting all the requirements?
It is not only your child that will be scrutinized for the earned income credit policy. The basic criteria you should meet is the income criteria listed in the above points. Next, you must have a United States of America citizenship or have been a resident alien for atleast a year. Your social security number must be valid.
- What are your state and local government policies?
Different state governments usually have additional benefits. Check with your state and local government to enquire what other benefits you may be applicable for.
- Which other policies are you qualified for?
There are multiple other income credit policies that are available for families and even single parents. Be sure to completely investigate all available policies before filing your taxes.
One thing all tax filers should keep in mind is that never to file in fraudulent data and false income statements. This is simply because, in order to save on a few dollars, you may risk having action taken against you. If you are unsure about anything, be sure to ask your local community authorities.