Earned Income Credit Amounts Rise for 2010

Liberty Tax Service
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Atlanta, GA 30308

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Over 24 million people claimed the Earned Income Tax Credit (EITC) during 2009, and more may be eligible due to job losses and reduced incomes this year.  Liberty Tax encourages low income wage earners to familiarize themselves with the qualifying conditions and changes on the horizon.  The EITC amounts have increased again, and greater benefits for taxpayers with three or more qualifying children remain in effect for filing a 2010 tax return.  After December 31, 2010, taxpayers will no longer be able to get the Earned Income Credit as an “advance” in their paychecks. 

Those eligible for the federal EITC may reap additional tax benefits on their state tax returns.  Eleven states and even some cities offer a refundable tax credit modeled after the federal EITC.  They are Kansas, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New Jersey, New York, Rhode Island, Vermont, Wisconsin, plus the District of Columbia, and the cities of New York and San Francisco.

Because the EITC is a refundable credit, it can reduce or eliminate tax liabilities for eligible wage earners with and without children.  Welfare benefits, food stamps and low income housing eligibility are not affected or forfeited if the taxpayer claims the EITC.  

The adjusted gross income (AGI) limits for the earned income credit and maximum available refund amounts for 2010 are:

• $43,352 for taxpayers with three qualifying children, ($48,362 for Married Filing Jointly): $5,666 maximum
• $40,363 for taxpayers with two qualifying children, ($45,373 for Married Filing Jointly): $5,036 maximum
• $35,535 for taxpayers with one qualifying child, ($40,545 for Married Filing Jointly): $3,050 maximum
• $13,460 for taxpayers with no qualifying children, ($18,470 for Married Filing Jointly): $457 maximum amount

“The IRS has extended the nontaxable combat pay election for active duty military regarding EITC for years after 2007.  Active duty military who served in a combat zone this year may elect to include combat pay in earned income to figure the earned income tax credit, if this increases their benefit,” said Kesha Haley, Franchisee/Owner, of Liberty Tax Service. “This does not make combat pay taxable.” 

The maximum amount of investment income for eligibility is $3,100 in 2010.  To claim children for the purposes of claiming EITC, the child must be your child, stepchild, eligible foster child, adopted child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew) who has lived with you for over half the year. They must also meet the age qualification.  A child of a live-in boyfriend/girlfriend is not a qualifying child for EITC.

About Liberty Tax Service

Liberty Tax Service is the fastest-growing retail tax preparation company in the industry’s history.  Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 8,000,000 individual income tax returns.  With 41 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service. 

Liberty Tax Service provides computerized income tax preparation, electronic filing, refund loans, and online filing through eSmart Tax.  Each office offers customers audit assistance, a money back guarantee, and free tax return checking.