Earned Income Tax Credit - A Tax Break for Working People
The Earned Income Tax Credit (EITC) is a refundable tax credit for families and individuals who have earned income from employment. It increases the amount refunded to a taxpayer or reduces the amount of tax owed. However, you need to file a tax return to claim EITC.
New Jersey wage earners can also take advantage of the state's own EITC program. Residents who are eligible and file for a Federal earned income credit can also receive a New Jersey earned income credit in the amount equal to 35% of their federal earned income credit.
The credit is based on gross earned income, filing status, and the number of qualifying children in the home. To qualify, your earned income and adjusted gross income (AGI) must be less than:
- $47,955 ($53,505 if married and filing jointly) with three or more qualifying children;
- $44,648 ($50,198 if married and filing jointly) with two qualifying children;
- $39,296 ($44,846 if married and filing jointly) with one qualifying child;
- $14,880 ($20,430 if married and filing jointly) with no qualifying children.
For the 2016 tax year, you could receive a maximum federal credit of:
- $6,269 with three or more qualifying children;
- $5,572 with two qualifying children;
- $3,373 with one qualifying child;
- $506 with no qualifying children.
You could also receive a 2016 New Jersey state credit of:
- $2,195 with three or more qualifying children;
- $1,951 with two qualifying children;
- $1,181 with one qualifying child;
- $178 with no qualifying children.
Free tax assistance is available to individuals with low or moderate income, seniors, and people with disabilities. Seniors can get tax preparation help at AARP Foundation Tax-Aide sites around the state. Other qualifying taxpayers can go to Volunteers in Tax Assistance (VITA) sites. The NJ 2-1-1 Partnership maintains a list of VITA/AARP sites. You can also reach the NJ 2-1-1 Partnership by dialing 2-1-1. You can also use the IRS Get Free Tax Prep Help search tool or by calling 800-906-9887.
The Free File Alliance is a public-private partnership of the Internal Revenue Service (IRS) and the Free File Alliance LLC, a nonprofit coalition of 13 leading tax software companies. Taxpayers with an Adjusted Gross Income of $64,000 or less can visit www.irs.gov/freefile to prepare and file their federal return at no cost.
Other useful web sites for EITC information include:
NJ VITA Sites
IRS Get Free Tax Prep Help
EITC Outreach - targeted to nonprofits
Internal Revenue Service EITC Home Page
IRS Publication 596
IRS Notice 797 - "Possible Federal Tax Refund Due to the Earned Income Credit (EIC)"
IRS Notice 1015 - "Have You Told Your Employees About the Earned Income Credit (EIC)?"
NJ Division of Taxation Notice to Residents
NJ 2016 EITC Fact Sheet