Don’t leave your money on the table during this tax season!

By Mikki Venekamp, AFC®

The tax filing deadline is a month away, and many of us are still looking for ways to get more refunds during tax time, especially with the current economic condition. However, many often leave money on the table by overlooked the Earned Income Tax Credit (EITC).

EITC is a refundable federal income tax credit for low and moderate income working individuals and families. Those who are not tax professionals often ask what does refundable credit mean? The simplest explanation would be if there is any money left over that exceeds the individual’s income tax liability, the IRS will refund the balance.

According to the IRS, an estimated four out of five eligible workers and families get the credit, but millions miss it annually, either because they don’t claim it when filing or they don’t file a tax return at all. In addition, last year over 27 million eligible workers and families received more than $63 billion total in EITC, with an average EITC amount of $2,300.

Claiming EITC is not as complicated as you might think. There is a tool on the IRS website called the EITC Assistance (http://apps.irs.gov/app/eitc2013/) that helps individuals determine eligibility to claim the EITC credit, even if for those  not required to file a tax return due to their income being below the filing threshold.

The average EITC amount of $2,300 is a great way to jump start savings for an emergency fund. It is important  to take a moment to  utilize the EITC Assistance tool on the IRS website to find out if you or your family is eligible for this credit.

There are special rules for service member when it comes to EITC. According to the tax law, you do not have to report nontaxable income that you receive as a member of the Armed Forces as earned income for EITC. Nontaxable military income includes combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS).

As a tax filer, you must make the decision to have your nontaxable combat pay included in your earned income for EITC claim purposes. Find out what is best for you or your family by calculating your taxes with or without combat pay as earned income. It is dependent on your circumstances, such as family situation and work status. Including your nontaxable combat pay as earned income may decrease the amount of tax you owe, which could result in a larger refund.

Be advised that when it comes to paying someone to file your tax return, that should be a last resort, unless you have a complicated return to file. Most of us can utilize the FREE resources, such as Military One Source, VITA sites on installations, and Free File software on the IRA website to file our return for free. 

More Articles on Tax-Time Saving

·         Grow Your Tax Refund with Savings Bonds

·         Savvy Allocation of Your Tax Refund

·         Saving at Tax Time

Tip of the Day

  • Written by | September 30, 2014

    Rounding #debt and #mortgage payments up to the nearest $100 will get you out of debt years earlier.

Saver Stories View all »

Making Saving Automatic Leads to Personal Success

Written by Lila Quintiliani | May 27, 2020

Ryan’s savings journey started when he was an active duty airman. Frequent deployments and temporary duty assignments gave him the opportunity to save. By the time he transitioned out of active duty, he had built up a healthy rainy-day fund and had started to aggressively save for retirement.

Read more...

How Smart Financial Decisions Can Create Opportunities 

Written by | November 22, 2019

Written by Stephen Ross, America Saves Program Coordinator | November 22, 2019

Of the many stories Military Saves shares, most describe how someone was in dire straits financially and worked their way out of it with the help of Military Saves. This time we want to highlight a different kind of story. This is a story about how responsible financial decisions can build on one another to create opportunities you thought only the super-rich enjoy.

Read more...

Involving Kids in Family Finances

Written by | April 19, 2019

 

One of the best lessons we can share with our kids is about money. By middle school, kids should have a good understanding of how money works as well as the importance of saving.

Read more...