Earned income tax credit explained

Tax credits are something that can befuddle people who aren’t familiar with our nation’s tax code.

Well, I want to clear up the confusion about one of the most potentially lucrative ones — the Earned Income Tax Credit.

In order to qualify for it, you must have earned income either from working for someone else, being a freelancer or independent contractor or being your own boss and running a business.

The EITC is aimed at workers on the low to moderate end of the income scale — those who earned $53,930 or less in 2017.

The IRS has more granular details based on the number of qualifying children you’re claiming. Just visit IRS.gov and search “EITC.”

For working families, the benefit tends to be larger — up to $6,318 if you have three qualifying children.

With two qualifying children, you can get $5,616. Only have one child? You could get $3,400.

Have an income below $20,600 and no qualifying children? The IRS says you may be eligible for a smaller credit of up to $510.

Certain taxpayers aren’t required to file a tax return. Yet even if you don’t owe the IRS or aren’t required to file, the EITC could make it worth your while to file! You wouldn’t want to leave up to $6,318 sitting on the table, would you?

People who file and claim the EITC will have to play a waiting game with the IRS. The IRS is required to hold any refund involving the EITC until mid-February to detect fraud and prevent errors.

In fact, the IRS has repeatedly said that Feb. 27 is the earliest any refund will be available. And that’s assuming there are no other problems with your return and you choose to get your refund via direct deposit. Clark Howard helps you save more, spend less, and avoid ripoffs. Visit ClarkHoward.com for more info, or get his bestselling books signed with free shipping at GetClarkSmart.com.