Are Working Grandparents Really Eligible for a Tax Credit?

The Earned Income Tax Credit (EITC) is a federal income tax credit for workers who don't earn high income ($53,505 or below for 2016) as well as meeting certain eligibility requirements. Those who qualify and claim the credit on their individual income tax return could pay less tax, no tax, or possibly even receive a refund. The EITC could put up to $6,269 into your pocket!Many grandparents care for their grandchildren full-time, yet never know they could claim them under the EITC. Even if you’re 65 or older, as long as the qualifying child lives with you, you may qualify for the EITC. Normally to qualify, the child must meet the dependency requirements.If the child's parents also qualify for the EITC, special rules exist and restrictions apply. Details, including numerous helpful examples, can be found in Publication 596. The publication also includes special rules for individuals receiving disability benefits and members of the military.To qualify for EITC, the taxpayer must earn income from a job or self-employment, meet basic rules and eligibility depends on family size. Certain disability payments may also qualify for EITC purposes.Use the EITC Assistant located on IRS.gov to determine eligibility, estimate the amount of your credit, and more. To be eligible you must file a tax return, even if you’re not required to. File electronically using free community tax help sites or IRS Free File.A new law now requires the IRS to hold refunds claiming the credit until mid-February, so refunds just started for this tax season. Taxpayers claiming the EITC should file as soon as they assemble the necessary documentation to file an accurate return.Ensuring you take advantage of the benefits built into the tax code is an important aspect of long-term tax and financial planning. The proven accountants at Patrick & Robinson CPAs can help. Contact us at 904-396-5400 or Office@CPAsite.com.