Tax Information With A Mother's Touch
Published by Eva Rosenberg, MBA, EA
Volume 6, Issue 280 October 22, 2004
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Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA Volume 6, Issue 280 October 22, 2004 |
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 A Google Answers user asked what the latest numbers were for people who claimed the Earned Income Credit - and how many people could have, but didn't. TaxMama Replies The Earned Income Credit, for those who aren't familiar with it, is a negative tax. It's designed for those whose earnings are at the poverty level to get some money back from Uncle Sam to help a little with expenses. A household with 2 children can get up to $4,140 back from IRS. So, it's a pretty good deal. On the 2002 tax returns, the average household who claimed the EIC received about $1,732, based on this report. Number of returns with credit (millions): 21.3As a result of the EIC, IRS issues the following refunds: Number issued (millions): 18.0There are no published statistics about how many taxpayers that are entitled to the EIC don't take it. However, let's look at Individual tax returns filed in 2002 to see who might possibly qualify: Form 1040A with TPI under $25,000 [7,8]: 35,631,532You can see there are over 53 million taxpayers who are apt to qualify, based on low income, especially if they had children. Only those who are married, or head of household qualify. (There is a small EIC for single people, but it's insignificant.) I think this is the best indicator, though: There were a total of 25,975,097 returns that took a Child Tax Credit (i.e. families with children that might possibly qualify for the EIC) And 21.3 million taxpayers used the EIC. So, based on the population of returns with children, there probably weren't many more than 4 or 5 million who might have been eligible, who did not use the Earned Income Credit. Note: The child tax credits are available to families with incomes much higher than those who qualify for the EIC. See the income thresholds at which the child tax credits are phased out: Married Filing Jointly: $110,000While the Earned Income earnings limits are: $33,178 if you have two or more children ($4,140 max. credit)So, it's likely that the number of those who did not claim the credit is much lower than the 4 or 5 million. In addition, families with low taxable incomes will also lose their EIC rights if part of their low income derives from investments. So that will further reduce the potential population of those eligible. One thing that NONE of the IRS statistics show is the number of people who don't file tax returns at all, who are eligible for the EIC. And I don't know how to find those number for you. But, if you know someone who is living on a really tight budget and has a child or two - and isn't bothing to file tax returns because they never took any withholding - get them to file. They might be able to get several thousand dollars worth of refunds for 2001 - 2003. Help them! Best wishes Your TaxMama-ga  |
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| Library of Congress - ISSN 1532-0790 Copyright © 2000-2007 - Eva Rosenberg |
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