Tax credits are a great way to pay less in taxes, and the
Earned Income Tax Credit is especially useful for lower-income
taxpayers. But how does it work?
In the following video, Dan Caplinger, The Motley Fool's
director of investment planning, goes through the basic elements
of the Earned Income Tax Credit. He notes that the credit is
available to low- and middle-income taxpayers, with credits that
can exceed $6,000 for those with three or more children who are
18 or younger or are full-time students and 23 or younger, and
maximums of $5,372 apply for those with two children, $3,250 for
those with one child, and $487 for those with no children. But
the idea of earned income is essential for the credit, with only
those who earn wages, salary, tips, self-employment income, or
other income from work eligible for the credit.Dan also points
out that phaseouts apply, with reduced credits available up to
roughly $38,000 to $46,000 for single filers with children or
$14,000 for those with no children.
To learn more about eligibility, Dan recommends visiting the
IRS website and using the Earned Income Tax Credit Assistant,
which can run you through the specifics for your situation.
Get the tax breaks you deserve
The Earned Income Tax Credit is a key way many lower-income
taxpayers can fight tax increases that took effect at the
beginning of 2013 and affected nearly every American taxpayer.
But it's not the only way. With the right planning, you can
take further steps to take control of your taxes and
potentially even lower your tax bill. In our brand-new special
How You Can Fight Back Against Higher Taxes
How You Can Fight Back Against Higher Taxes," the Motley Fool's
tax experts run through what to watch out for in doing your tax
planning this year. With its concrete advice on how to cut
taxes for decades to come, you won't want to miss out.
Click here to get your copy today -- it's absolutely free.
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