The Earned Income Tax Credit (EITC) is a federal income tax credit given to individuals and couples of the low and middle class to the limit earnings of $48,362 a year.
This tax credit was originally introduced by Congress in 1975 through legislation and the original intent of this credit was to provide some form of offset to the Social Security taxes for the lower income earners. There are various guidelines and rules that apply to this tax credit. Some of these rules are provided below:
For you to be considered for this tax credit, you need to have specifically requested for it. You can do this by indicating the request at the Schedule EIC (Earned Income Credit) of the Form 1040. You can also apply electronically through the IRS website as you make your e-file submissions. For you to qualify for the tax relief, you must have made some sort of "earned income" in the year at question.
Inheritance Tax Thresholds Only estates valued above the IHT threshold are taxable. The IHT threshold is 325,000 in 2011-12 for a single person, while married couples and civil partners can increase the threshold upon the death of the second partner to 650,000.
Those who do not fall into the nil rate band will have to pay tax at a rate of 40% on the value of the estate above the IHT threshold.
IHT Exemptions It is sometimes possible to reduce the amount of the IHT payable, or avoid paying it even when your assets are above the IHT threshold through exemptions and reliefs that include: * Donations to UK-registered charities and donations to some political parties - Gifts made to UK charities during your lifetime or in your will are exempt. * Annual and small gift exemptions - You can give away up to 3,000 each year tax-free and give away additional small gifts of up to 250. * Wedding and civil partnership gifts - Tax-free gifts for weddings and civil partnerships range from 1,000 to 5,000. * Potentially exempt transfers - Gifts made more than seven years before the deceased's death can also be exempt from IHT, regardless of the value of the gift.
The EITC qualifications and disqualifications are not final and apply only for a given year. Therefore, you may not have qualified in a previous tax year and yet be eligible for the credit in the current or future years. Various tax changes can lead to an individual or couple qualifying for the credit, even though they were previously ineligible. Therefore, if you earn less than $48,362 a year, it is always advisable to keep applying every year.
IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
This tax credit was originally introduced by Congress in 1975 through legislation and the original intent of this credit was to provide some form of offset to the Social Security taxes for the lower income earners. There are various guidelines and rules that apply to this tax credit. Some of these rules are provided below:
For you to be considered for this tax credit, you need to have specifically requested for it. You can do this by indicating the request at the Schedule EIC (Earned Income Credit) of the Form 1040. You can also apply electronically through the IRS website as you make your e-file submissions. For you to qualify for the tax relief, you must have made some sort of "earned income" in the year at question.
Inheritance Tax Thresholds Only estates valued above the IHT threshold are taxable. The IHT threshold is 325,000 in 2011-12 for a single person, while married couples and civil partners can increase the threshold upon the death of the second partner to 650,000.
Those who do not fall into the nil rate band will have to pay tax at a rate of 40% on the value of the estate above the IHT threshold.
IHT Exemptions It is sometimes possible to reduce the amount of the IHT payable, or avoid paying it even when your assets are above the IHT threshold through exemptions and reliefs that include: * Donations to UK-registered charities and donations to some political parties - Gifts made to UK charities during your lifetime or in your will are exempt. * Annual and small gift exemptions - You can give away up to 3,000 each year tax-free and give away additional small gifts of up to 250. * Wedding and civil partnership gifts - Tax-free gifts for weddings and civil partnerships range from 1,000 to 5,000. * Potentially exempt transfers - Gifts made more than seven years before the deceased's death can also be exempt from IHT, regardless of the value of the gift.
The EITC qualifications and disqualifications are not final and apply only for a given year. Therefore, you may not have qualified in a previous tax year and yet be eligible for the credit in the current or future years. Various tax changes can lead to an individual or couple qualifying for the credit, even though they were previously ineligible. Therefore, if you earn less than $48,362 a year, it is always advisable to keep applying every year.
IRS Circular 230 Disclosure Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
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