Richard G. Lugar, United States Senator for Indiana

In advance of National Earned Income Tax Credit (EITC) Day on January 30, 2009, U.S. Sen. Dick Lugar recorded a 30-second public service announcement encouraging eligible Hoosiers to apply for the EITC.

Video is also available on Lugar’s YouTube page: http://www.youtube.com/senatorlugar

Audio is available at: http://lugar.senate.gov/press/audio.cfm

The EITC is a refundable tax credit available to families with a working member where the family income falls below $42,000. The tax credit was designed to decrease the tax burden and supplement wages, as well as provide incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax credit for those taxpayers who qualify and claim the credit.

Nationally, the IRS estimates that 20 to 25 percent of eligible Americans do not claim the EITC which could put as much as $4,824 into the pockets of a family with two children, $2,917 to a family with one child or $438 for worker with no children.

In addition, taxpayers who qualify can retroactively claim three years of the EITC if eligible in the previous years. This is money that hard-working people have earned and when claimed can be saved or put back into the economy.

According to the IRS, more than 473,000 Hoosiers claimed the federal EITC in 2007 for refunds totaling $909 million.

Enacted by Congress in 1975, the EITC is a refundable tax credit available to families with a working member where the family income falls below a certain level. The EITC was designed to decrease the tax burden and supplement wages, as well as provide incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax credit for those taxpayers who qualify and claim the credit.

To qualify for the EITC, taxpayers must file a tax return, even if they are not required based on income, and meet ONE of the following income qualifications for 2008:

· Have two or more children with earned income less than $38,646 if single or $41,646 if married and filing jointly;

· Have one child with earned income less than $33,995 if single or $36,995 if married and filing jointly;

· Have no children with earned income less than $12,880 if single or $15,880 if married and filing jointly.

In addition to meeting one of the income qualifications, taxpayers must meet ALL of the following requirements:

Must have a valid Social Security Number
You must have earned income from employment or from self-employment.
Your filing status cannot be married, filing separately.
You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
You cannot be a qualifying child of another person.
If you do not have a qualifying child, you must:
- be age 25 but under 65 at the end of the year,
- live in the United States for more than half the year, and
- not qualify as a dependent of another person
Cannot file Form 2555 or 2555-EZ (related to foreign earn income)
EITC Thresholds and Tax Law Updates
Special rules may apply

Hoosiers eligible for the federal EITC may also be eligible for the state EITC. The Indiana earned income credit is 6 percent of the earned income credit you claimed on your federal income tax return. For additional information on Indiana’s EITC please visit http://www.in.gov/dor/files/08-ineic.pdf.

For assistance in determining eligibility, taxpayers may use the EITC Assistant, a new web-based tool, available at http://www.irs.gov. By providing basic information, this program will assist taxpayers with filing status, determining eligibility and estimating the amount of credit you may receive. In addition, the IRS has Volunteer Income Tax Assistance (VITA) centers available throughout the state to provide free assistance with tax preparation. For a center located near you, call Lugar’s Indianapolis office at (317) 226-5555 or visit http://lugar.senate.gov/eitc/. Taxpayers may request a free copy of Publication 596 Earned Income Credit by calling the IRS at 1-800-829-3676.

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