Finance

Help Getting the Earned Income Tax Credit

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Courtney O’Reilly, director of Tax Help Colorado, a VITA participant who worked with Code for America in 2020, said traditional VITA locations may not always be suitable for working families, even without a pandemic. People may not take time to visit the place and may have to stand in line.

“Free doesn’t always mean accessible,” said Ms. O’Reilly.

Two years ago, the group was looking for ways to reach more families eligible for Earned Income Tax Credit and found the Get Your Refund platform helpful.

Filers can verify their identities and upload tax documents through the Get Your Refund website or mobile app. They can then speak to a volunteer who will prepare their return without meeting anyone in person. Personal help is crucial. Research by Code for America and others has found that telling people about the tax credit is not enough to get them to claim it. Often times, people are intimidated by the tax information required and may need help filling out the forms.

Here are some questions and answers about the earned income tax credit:

How does the tax credit work?

Credits are deducted from the amount you owe in taxes. Earned Income Tax Credit is “refundable”. If a family’s credit is greater than their tax liability, the excess is paid out as a refund.

The amount of the loan depends on your income, family size, and registration status. For the 2020 tax year, credit is available to applicants earning up to $ 57,000. The maximum balance is $ 6,660.

What if my income fell in 2020 due to the pandemic?

The latest round of federal pandemic aid dealt with this situation. When you file your 2020 tax return, you can use the income you earned in 2019 to qualify for the Earned Income Tax Credit, as well as the refundable portion of the Child Tax Credit if that translates into larger credits. In general, as your income increases, the amount of your credits will increase up to the maximum credits allowed.

When does the tax return start?

The IRS usually starts accepting tax returns in late January. Individuals applying for the Earned Income Tax Credit and Child Tax Credit usually register early. By law, as a fraud prevention measure, the IRS will not pay tax refunds for returns that are requested before mid-February.

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