**read slide then explain refundable and non refundable difference**A tax credit can be refundable or non-refundable.To better explain the difference, I’ll have to start with an example:Let’s say you owe $500 in taxes before looking at any of your tax credits. Boo!You find that you are entitled to a tax credit of $1,000. Yay!If the tax credit is refundable, then the government would send you a $500 check. You owe $500, you have a refundable $1000 credit, so you are entitled to the difference.If the tax credit non-refundable, then you get nothing. You owe $500, you have a non-refundable $1000 credit, but since it’s non-refundable, you don’t get the difference.That’s why refundable tax credits are so awesome… unfortunately, there aren’t very many refundable tax credits. In fact, as of this writing there are only five – the Additional Child Tax Credit, the Earned Income Credit, the Excess Social Security and RRTA Tax Withheld Credit, the First-time Homebuyer credit, and the Health Coverage Tax Credit. Every other credit is non-refundable.
*read note below before reading slide*The process of claiming E.I.T.C is actually rather difficult, there are many qualifications for receiving this credit, above are the three basic requirements in order to even begin the process of qualifying. *Read the three requirements*File correctly means to,Not file as "married filing separate,"Not file Form 2555 or Form 2555-EZ.And by “have earned income” you must meet the investment income limitation, which means for 2010 you must make no more than $3,100.
*read this note before reading the slide*Ifyou file for the E.I.T.C with one or more qualifying child, the figures above show how much more you’re credit can be. These figures are based off of E.I.T.C for the year 2010.*Only read the second bulletin**
**you don’t have to read this slide..instead say..**“Here we have the guidelines for qualifying children.As mentioned earlier, there are a number of qualifying situations that can make you eligible for E.I.T.C. Besides the ones mentioned above, there are a few more exceptions for special situations”“For example…If your child is permanently and totally disabled at any time during the year, regardless of age, you qualify for E.I.T.C.”“Or…If your child is a full-time student under age 24 at the end of the year and younger than you or your spouse, you qualify for E.I.T.C”
**Readslide,then say…**“Democrats would also like to increase EITC in order to further support low income families.
**Read slide, then say.**“Republicans believe that the money for EITC should be lowered and put towards other programs.”
Earned Income Tax Credit
+ Earned Income Tax Credit Presented By:Kelsey Pizana, Steven Ventimiglia, Corey Minor
+ What is Earned Income Tax Credit? The Earned Income Tax Credit is a refundable credit for middle to E.I.T.C lower class people. Receiving EITC will result in a refund after taxes. In simple terms, it’s a credit that helps workers keep more of what they earn.
+ Who has earned E.I.T.C?Only 21 states have enacted refundable E.I.T.C, they are highlighted in blue below. While 3 states have non- refundable tax credits.
+ Who qualifies for E.I.T.C? Have a valid Social Security number, and Those file correctly. qualifying for Have E.I.T.C must earned have each of income. the following: Generally, be a U.S. citizen or resident alien for the entire year.
+ How does E.I.T.C work? E.I.T.C does Instead, if a It is not a not directly refund is due deduction that reduce the to the lowers the amount of a taxpayer, E.I.T. wage amount persons final C will simply that taxes are tax amount increase the figured on--it due to the refund. comes off the government. bottom line dollar for dollar.
+ What exactly is earned income? Earned income includes all the taxable income and wagesyou get from working.-There are two ways to get earned income:• You work for someone who pays you, or;• You work in a business you own.*Taxable earned income also includes:* Wages, salaries, and tips; Union strike benefits; Long-term disability benefits received prior to minimum retirement age; Net earnings from self-employment.
+ E.I.T.C and qualifying children…For individuals filing with qualifying children, the E.I.T.C they receive can drastically increase… For tax year 2010, the maximum EITC for a person or couple without qualifying children is $457, with one qualifying child is $3,050, with two qualifying children is $5,036, and with three or more qualifying children is $5,666.
+ A qualifying child must meet the following guidelines. Your child must have lived with Related you in the United through States for more blood, law, Under age 19 at than half of theor marriage. the end of the year. year and younger than you or your spouse if you file a joint return.
+ Democratic ViewDemocrats support EITC as one of thegovernments most successful programs, theyclaim:-E.I.T.C gives tax credits to low and moderateincome families-The program supports single parents to find jobs.-E.I.T.C not only helps the low income families, butalso the neighborhoods by having EITC dollarsspent locally.-Democrats would like to increase EITC to furthersupport families.
+ Republican View Many Republicans and conservatives argue it is both unfair and politically dangerous to give such big tax credits to a large number of Americans. Republicans want to either keep EITC levels the same or decrease them because it is estimated that between 22% and 30% of taxpayers claiming the EITC on their tax returns do not actually qualify for it. They argue the program is error-ridden and is too much of an expense to the government.