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Earned Income Tax Credits Help Low Wage Workers In 2010, federal tax credits will mean more for working families than ever before as they continue to struggle with the pressures of a weak economy. Many have seen their incomes decline steeply because their hours have been cut or they’ve lost their jobs.
The Earned Income Tax Credit (EITC) is a refundable credit that is available to individuals and families who have low-to-moderate earned income and are raising one or more children under the age of 18. In some cases, a low-income taxpayer with no children may also be eligible. A refundable credit is a tax credit that low-wage workers can use to generate a refund even if they have no tax liability. Many states, including New Jersey, also have a state Earned Income Tax Credit, which combined with the Federal EITC, helps lift many low-wage workers out of poverty and promotes economic opportunity.
This year, Congress and the President have improved and expanded the array of tax credits, including the Earned Income Credit, the Child Tax Credit and the newly-created Making Work Pay Credit. But it’s important for people to realize the credits aren’t automatic like an income tax refund. They need to apply to the Internal Revenue Service for the credits.
For more information on who is eligible and how to apply, visit the Internal Revenue Service site at www.irs.gov/individuals/article/0,,id=96406,00.html
Check out the 2009 EITC Eligibility Data
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