What is the Earned Income Tax Credit?
The Earned Income Tax Credit, EITC, is a tax benefit for working people with low to moderate income. It is the largest and most successful anti-poverty program in the country. EITC can reduce the amount of tax you owe and may even give you a refund!
This can potentially benefit people with disabilities as well as staff from various community agencies in RI who earn less than $55,000.00 annually.
Do I Qualify for EITC?
To qualify for EITC you must have earned income from working or from running or owning a business or farm and meet some other basic rules. You must file a tax return, even if you do not owe any tax or are not required to file. And you can go back 3 years and re-file your taxes if you did not claim this benefit!
The IRS believes that many people who qualify for the EITC do NOT claim it, probably because they do not know about it. Don’t let that be YOU! You may be able to put more cash in your pocket!
The EITC is a credit for BOTH your Federal and State Income Tax. The STATE CREDIT FOR RI is 12.5%
What is Taxable Earned Income?
- Wages, salaries, and tips
- Union strike benefits
- Long-term disability benefits received prior to minimum retirement age
- Net earnings from self-employment
- Gross income received as a statutory employee
Earned Income does not include:
- Interest and dividends
- Social security and railroad retirement benefits
- Welfare or Veterans benefits
- Pensions or annuities
- Workers’ compensation
- Alimony and Child Support
- Foster Care payments
- Unemployment compensation
- Earnings for work performed while an inmate at a penal institution
- Taxable scholarship or fellowship grants that are not reported on Form W-2
Where Can I Get More Information?
United Way of RI is responsible for the Volunteer Income Tax Assistance (VITA) Program, with 23 FREE Tax Preparation Sites statewide throughout RI. Each site is staffed by IRS trained and certified volunteers who offer services in both English and Spanish. Sites opened the week of January 22, 2018.
The goal of VITA is to ensure that working Rhode Islanders who earn $55,000 or less annually and meet the eligibility requirements have access to FREE Tax Preparation Services to receive the money they are due in tax refunds and tax credits. VITA volunteers work to ensure that individuals who are eligible access important tax credits—such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC)— which reduce tax burden and often lead to a larger refund!
- United Way of Rhode Island, in partnership with Citizens Bank, invested $210,000 to support VITA sites across the state.
- This $210,000 investment enabled nearly 13,000 individuals and families to get free tax preparation services, returning over $23,000,000.00 directly into their pockets. $7.4 million of this was based on EITC credits.
- Over 228 trained volunteers provided free tax preparation assistance at VITA sites across the state, volunteering over 14,747 hours.
- The total amount saved on VITA tax preparation fees in 2017 was $4,329,000.00
Article and information prepared by the RI Developmental Disabilities Council (RIDDC)