Purpose of This Computer Program The purpose of this application is to help employees to ensure that they do not have too much or too little income tax withheld from their pay. It is not a replacement for Form W-4, but most people will find it more accurate and easier to use than the worksheets that accompany Form W-4. You may use the results of this program to help you complete a new Form W-4, which you will submit to your employer.
Tips For Using This Program
- Have your most recent pay stubs handy.
- Have your most recent income tax return handy.
- Fill in all information that applies to your situation.
- Estimate values if necessary, remembering that the results can only be as accurate as the input you provide.
- Consult the information links embedded in the program whenever you have a question.
- Print out the final screen that summarizes your input and the results, then use it to complete a new Form W-4 (if necessary), and keep it for your records.
Who Can Benefit From This Application?
- Employees who would like to change their withholding to reduce their tax refund or their balance due;
- Employees whose situations are only approximated by the worksheets on the paper W-4 (e.g., anyone with concurrent jobs, or couples in which both are employed; those entitled to file as Head of Household; and those with several children eligible for the Child Tax Credit);
- Employees with non-wage income in excess of their adjustments and deductions, who would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures.
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What Is EITC?
The Earned Income Tax Credit (EITC) is a tax credit for people who work but do not earn high incomes. For eligible taxpayers, EITC is a valuable tool to lower their taxes or to claim a refund.
In other words The Earned Income Tax Credit is a refundable federal income tax credit for low-income working individuals and families.
The Internal Revenue Service today announced a new Web-based tool to help working families determine if they are eligible for the Earned Income Tax Credit. The EITC Assistant will help take the guess work out of the EITC eligibility rules.
The EITC Assistant is one in a series of steps taken by the IRS to encourage all eligible taxpayers, but only those who are eligible, to claim the valuable EITC refund. For the 2004 tax year, the maximum credit is $4,300, which helps lift millions of families out of poverty.
How It is Helpful tool?
By answering a few simple questions and providing some basic income information, the program will assist taxpayers in determining their correct filing status, determining whether their children met the tests for a qualifying child and estimate the amount of credit that taxpayers may receive.
How to Qualify for EIC?
To qualify, you must meet certain requirements and file a U.S. Individual Income Tax Return. As described below, some EITC rules apply to everyone. There are also special rules for people who have children and for those who do not.
Individuals and families must meet certain general requirements:
To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return. The amount of the credit is determined by earned income and the number of children in the household.
Your income cannot exceed certain limitations:
For Tax Year 2004, you must have adjusted gross income of less than:
- $34,458 ($35,458 if married filing jointly) with two or more qualifying children.
- $30,338 ($31,338 if married filing jointly) with one qualifying child.
- $11,490 ($12,490 if married filing jointly) with no qualifying children.
2004 tax year, individuals without qualifying children must earn less than $11,490 ($12,490 if married filing jointly); individuals with one child must earn less than $30,338 ($31,338 if married filing jointly) and individuals with more than one child must earn less than $34,458 ($35,458 if married filing jointly).
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