American taxpayers are leaving billions of dollars on the table thanks to unclaimed income tax credits. Designed to help propel the low income working poor out of poverty, the Earned Income Tax Credit or (EITC) is a tax deduction that is based on income level and available to families and single filers with or without children.
According to the Government Accountability Office (GAO) and the Internal Revenue Service, more than $3 million dollars of Earned Income Tax Credit deductions went unclaimed in 2012, indicating that up to 25 percent of households are missing out on the added deduction. The Earned Income Tax Credit is determined by the amount of income earned in a tax year (wages, salary, tips) from all employment. Other taxable forms of income such as Social Security and unemployment benefits also qualify as earned income. To take the Earned Income Tax Credit, a married couple with two children and an annual income of $15,000 would be entitled to a tax credit of $5,036. Likewise, a single taxpayer earning $15,000 per year will qualify for the same amount of EITC.
The IRS recommends that taxpayers who are unsure whether or not they are able to claim the Earned Income Tax Credit contact either their employer’s human resources department or refer to the Internal Revenue Service website.