Tax Credits

Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC) is a refundable federal income credit designed for individuals and families who earn low-to- moderate incomes. The credit can reduce tax liability, or provide a sizable refund when taxpayers have no withholdings.

Originally approved by Congress in 1975, the EITC is meant to offset the burden of social security taxes and provide an incentive to work. When the EITC exceeds the amount of taxes that are owed, it results in a tax refund to those who claim (and qualify for) the credit.

To qualify, you must meet certain requirements and file a tax return, even if you do not owe any taxes or are not required to file.

Learn more about the EITC by visiting www.irs.gov or visiting your local VITA office. Location information is available at www.ftb.ca.gov or by calling 800.852.5711.

Child Tax Credit

The Child Tax Credit is an important tax credit that may be worth as much as $1,000 per qualifying child depending upon your income.

To qualify for this tax credit the child must have been under age 17 (age 16 or younger) at the end of 2011. The child must either be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew. An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

You must claim the child as a dependent on your federal tax return and the child must be a U.S. citizen, U.S. national, or U.S. resident alien. The child also needs to have lived with you for more than half of the year.

The credit is limited if your modified adjusted gross income is above a certain amount, which varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe.

If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.

For more information on the Child Tax Credit, or to access the appropriate forms, please visit www.irs.gov.