The 2011 rate for business use of your vehicle is increased to 51 cents a mile (55 1/2 cents a mile after June 30, 2011). The 2011 rate for use of your vehicle to get medical care or to move is increased to 19 cents a mile (23 1/2 cents a mile after June 30, 2011). In addition, beginning in 2011, you may use the business standard mileage rate for a vehicle used for hire, such as a taxicab.

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Besides filing a tax return, people must meet various requirements. Some of these requirements apply to everyone. Then there are additional requirements that only apply to families, and another set of requirements that only apply to people without children.

Rules for Everyone:

• You must have earned income, such as wages, tips or the income you make from running a business or farm. Most other types of income, such as retirement pensions, though usually taxable, do not count as earned income.
• You must have a valid Social Security number for yourself, your spouse and your qualifying children.
• You can get the credit, even if you have a small amount of investment income, such as interest from a bank account. However, the amount of your investment income is limited to $3,150.
• Your filing status must be single, head of household, married filing jointly or qualifying widow or widower. If you file as married filing separately, you cannot get the credit.
• Generally, you must be either a U.S. citizen or resident alien.
• You cannot be a qualifying child of another person.
• You cannot file Form 2555 or Form 2555-EZ. These forms are used to claim the foreign earned income exclusion, a tax benefit for Americans who live and work abroad.

In addition, your income must be below certain limits. For tax year 2011, both earned income and adjusted gross income (AGI) must each be less than:

• $13,660 ($18,740 married filing jointly) with no qualifying children
• $36,052 ($41,132 married filing jointly) with one qualifying child
• $40,964 ($46,044 married filing jointly) with two qualifying children
• $43,998 ($49,078 married filing jointly) with three or more qualifying children

Special Rules for Families

If you claim the credit, based on having one or more qualifying children, each child must meet the relationship test, age test and residency test. Each child must meet all three tests.

Relationship test. The child is your:

• Son or daughter, including an adopted child or child placed for adoption,
• Stepchild or grandchild,
• Foster child placed by an authorized placement agency or court,
• Brother, sister, stepbrother, stepsister, half brother, half sister or a descendant of any of them.

Age test. At the end of 2011, the child was younger than you or your spouse. And:

• Younger than 19,
• Younger than 24 and a full-time student, or
• Any age if permanently and totally disabled

Residency test. The child lived with you in the U.S. for more than half of 2011. In addition, if a qualifying child files a joint return, he or she can only do so to claim a refund.

• A qualifying child cannot be used by more than one person to claim EITC. If a child meets the rules to be a qualifying child of more than one person, only one person can use that child to claim the EITC. Also, if a qualifying child can be claimed by both a parent and another person, the other person can only get the credit if his or her AGI is higher than the parent’s.

Special Rules for People Who Have No Children. Taxpayers without a qualifying child must meet three additional tests:

• Lived in the U.S. for more than half of 2011,
• At the end of 2011, was at least age 25, but under age 65,
• Cannot qualify as the dependent of another person.

Special Rule for Combat Pay. Combat pay received by members of the military serving in Afghanistan, Iraq and other combat zone localities is usually exempt from tax. But under a special rule, you can choose to count all of this income when you figure the EITC. In many cases, making this choice will enable you to claim the credit, or if you are already eligible, claim a larger credit.

Avoid Errors and Seek Accuracy

Even if someone else prepares your tax return, you are still responsible for the accuracy of your return. Because the EITC can be complex, many people claiming it make mistakes. Get help if you are not sure you qualify. Common errors include:

• Claiming a child who is not a qualifying child.
• Filing as single or head of household when you are actually married.
• Reporting incorrect income amounts.
• Missing or incorrect Social Security numbers for you, your spouse or your qualifying children.

If you receive an IRS letter requesting additional information, reply immediately to avoid delaying your refund. If you need help, call the phone number shown in the letter.

IRS.gov

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The 2011 EITC Assistant can help you determine if you can claim the EITC, “Am I an Eligible Individual? And help you calculate the amount of the credit, “How Much is My Credit” It also has one subsection. You can start on any topic to find out if you can claim the EITC for 2011.

NOTE: You will need to know your filing status for 2011 in order to use this program. If you do not know your filing status, you need to exit the EITC Assistant and determine your filing status using the Interactive Tax Assistant.

Start Here: Am I an Eligible Individual?
Determine if you are eligible for the Earned Income Tax Credit. Even if you are an eligible individual, whether you can claim the credit also depends on your filing status and income. This tool can help you determine your eligibility, your filing status, the status of a child as your qualifying child, and the estimated amount of your credit.

Is a Child My Qualifying Child?
Help in determining whether a child is your qualifying child.

Caution: If you lived in a disaster area in 2009, and your 2009 earned income was less than your 2008 earned income, you may qualify to use your 2008 earned income instead of your 2009 earned income to figure your EIC. Get the Latest Tax Relief Guidance in Disaster Situations.

How Much is My Credit?
If you already know that you are eligible for the credit for this tax year, this tool will estimate your credit amount. You will need to know the amount and types of income you received for the 2011 tax year and any adjustments to that income. You should use actual amounts if you have them available. The program will assist you by prompting you for the amounts needed.

NOTE: The information you provide will be used only for purposes of determining your eligibility. It will not be shared, stored or used in any other way, nor can it be used to identify the individual who enters it. The information is discarded when you exit this program.

Versión en Español

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For millions of American families — especially those headed by single women — this tax season will offer hope, security and a potential reprieve from the crippling impact of the economy. This lifeline: the Earned Income Tax Credit (EITC).

The EITC is widely recognized as the largest and most effective anti-poverty program for low- to moderate-income working families, but the Treasury Department has estimated that up to one-quarter of low-wage workers fail to claim it.

EITC Awareness Day is a national effort held on January 27th to make families aware of the credit and to assist them in accessing services that will help them file and claim the credit.

Here in the DC metro region, Washington Area Women’s Foundation has found the credit to be particularly advantageous for women-headed families. Last year, the Foundation awarded grants to several DC-area nonprofits that have programs focused on financial education and wealth creation. Nonprofits like Capital Area Asset Builders and Community Tax Aid were able to help 800 women file for more than $2.4 million in tax credits and refunds. The average amount of EITC received per participant was just over $2,000.

For women who are struggling to feed their families or who are stretching to make it to the next paycheck, an influx of $2,000 could change their lives and the lives of their children. Some of the women who have claimed the EITC through programs that The Women’s Foundation has supported have used the credit to pay down their mortgages, finance their children’s college education or save for the future.

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Earned Income (EIC) Tax Calculator

Earned Income Credit (EIC) is a tax credit available to low income earners. In some cases the EIC can be greater than your total income tax bill, providing an income tax refund to families that may have little or no income tax withheld from their paychecks. Use this calculator see if you qualify for the Earned Income Credit, and if so, how much it might be worth to you and your family. This calculator creates estimated values for tax year 2011.

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Many Northeast Arkansans could overlook a special federal tax credit because they don’t know about it. As a result, they could miss out on up to $5,751 extra in their federal income tax refunds through the Earned Income Tax Credit, or EITC.

Last year, on average, the credit boosted refunds for eligible Arkansas workers by $2,366, according to IRS representatives. In Northeast Arkansas alone, approximately $4 million in EITCs are not claimed.

Some local agencies, such as United Way of Northeast Arkansas and East Arkansas Area Agency on Aging (EAAAA), are offering free assistance to help qualifying individuals complete their tax returns and find out how to claim this credit.

“EITC is a financial boost for working folks at any time, but especially now, and allows more funds to flow into our local economy,” said Paula Robertson, community impact coordinator, United Way of Northeast Arkansas.

Anyone earning $49,078 or less from wages, self-employment or farming in 2011 should see if they qualify. Eligible workers must file federal income tax returns, even if they are not required to file, and specifically must claim the credit to get it. “This money can make a real difference to workers struggling in this recovering economy,” said Lauren Isbell, director of the EAAAA’s Retired Senior Volunteer Program (RSVP).

Many people will qualify for the first time this year due to economic changes in their income or changes in their marital or parental status, according to the IRS. The agency estimates four out of five eligible workers currently claim their EITC.

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