Getting a refund? It depends

Jimmieka Mills, News Editor

Many students assume that federal income tax filing does not affect them and in some cases this is true. If you had no earned income and are a dependent of your parents, federal filing should not include you providing any documents of proof of income and taxes paid.

Students who have worked at any time during the year may be affected regardless of whether they are considered a dependent of a primary tax filer.

This may be better understood with a definition of earned income. This includes any income a filer has received for work performed typically reported on a form W2.

Students who worked during the year 2014 should receive a form W2 (some independent contracted workers will receive form 1099) with their total wages earned and taxes paid for the year.

The Earned Income Tax Credit (EITC) has been around a long time – it was signed by President Ford and then expanded in the tax reform act by President Reagan. It’s targeted at working individuals and families with low to moderate income.

Political views are always shifting, but many Democrats support the Earned Income Tax Credit as a critical part of the safety net and Republicans have backed it because it rewards work and family.

Not all filers are eligible for earned income credit it is dependent upon a few factors, age and income being two of those.

“Many low-income workers are not required to file a return due to income level, but they still may qualify for this tax credit so they could be missing out on hundreds, if not thousands of dollars in a tax refund,” explained Gwen Joyner, a Jackson Hewitt tax professional with 20 years of experience.

“Others may have been ineligible for the Earned Income Tax Credit last year and assume they’ll never be eligible, but changes in their life may make them eligible this year,” Joyner added.

The Earned Income Tax Credit can make a huge difference in the size of a tax return, but it’s also one of the most overlooked credits and it can be confusing. It has been estimated by The Internal Revenue (IRS) that one-third of the population eligible for the Earned Income Tax Credit changes each year based on marital, parental and financial status.

“The IRS actually wants people to get the refund they deserve; I remember at the end of last year’s tax season, the IRS was putting the word out that there was more than $760 million in unclaimed refunds from 2010 and the three-year window for claiming it was about to end,” said Terrel Walker, Tax preparer and ACA Specialist. “It was there for people to claim, but a lot of them missed out. We don’t want that to happen.”

The Earned Income Tax Credit is also frequently overlooked by veterans, recent graduates and grad students, in addition to those with low income who are not required to file.

“It can be confusing,” said Deniece Williams, a 13-year tax professional for Jackson Hewitt Tax Service. Filers can go back to the year 2011 and see if they qualified for this credit.“If you did, you can still get that money,” Williams explained.

The Earned Income Tax Credit qualifying criteria changes every year, and so if you’re going back to check on any credits you’re owed from, say, three years ago, a tax professional can help with that.

Those who wish to file their taxes independently known as do-it-yourself filers are encouraged to refer to a professional for help.

The details of EITC eligibility

To claim the EITC, taxpayers must be employed or self-employed and have a Social Security number. They will need to show proof of having less than $3,350 in investment income and have earned income and adjusted gross income lower than the following amounts:

Filing Status No Children 1 Child 2 Children 3 Children
Single, head of household, qualifying widow(er) $14,590 $38,511 $43,756 $46,997
Married filing jointly $20,020 $43,941 $49,186 $52,427


Here are some helpful tips on the Earned Income Tax Credit

  • You must have earned income from a job or self-employment.
  • You can’t file using married filing separately.
  • Children must be your dependent and living with you – Even if the noncustodial parent claims the dependent exemption the custodial parent is the only parent who can claim the EITC for that child.
  • Military active duty can choose to add their combat pay back to earned income when calculating the EITC – Nice hook – figure refund with and without the combat pay and claim the best. This does not make combat pay taxable.
  • Taxpayers and children must have a Social Security number (no Individual Taxpayer Identification Numbers (ITINs) allowed).
  • Don’t have children? You may still qualify for the EITC if you, or your spouse, are between ages 25 and 65.

Here are five groups that miss out on EITC

  • Taxpayers who don’t have to file a tax return due to low income. For example, single taxpayers with income less than $10,150 don’t have to file, but should file to get their EITC and any withholdings.
  • Families whose income dropped below $50,000 due to a change in job, relocation, health etc. EITC is not on the radar for these families because they never qualified before and don’t realize families with an income in the $40,000 a year range can qualify for EITC.
  • Grandparents, and other older family members, who take over the raising of grandchildren or other young family members. These taxpayers often have to go back to work to help supplement their retirement income and suddenly qualify for EITC because of their obligations to the children and the wages they are earning.
  • Taxpayers who recently left the military often fall into the EITC range as they start working in the civilian world again.
  • Young single taxpayers who are 25 or older and recently graduated.