/24-7PressRelease/ - NORTH CHARLESTON, SC, August 08, 2007 - The IRS recently announced an Advanced Earned Income Credit is being made available to eligible taxpayers. However, JK Harris & Company representatives want taxpayers to know what this Advanced Earned Income Credit really means to them.
"If you choose to take the advanced payments, you are required to deduct this portion received from your Earned Income Credit (EIC) at the time of filing your return," said JK Harris Licensed Taxpayer Representative and Enrolled Agent Mary Rivera. "Basically, if they qualified last year and are still making the same wage, they should qualify this year."
The EIC is a refundable federal income tax credit for low-income working individuals and families. 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.
What the IRS is doing with the Advanced EIC is giving the taxpayer a portion of their credit up front, instead of waiting until the taxpayer files a return. This process is not automatic, however. If a taxpayer expects to qualify for an EIC, Form W-5 needs to be completed and submitted to the taxpayer's employer. At that time, the Advanced EIC will be added to the taxpayer's net pay each pay period.
The decision to choose the Advanced Earned Income credit boils down to whether the individual wants or needs part of the money now or all of it once they file their returns. This needs to be thought through carefully and with some planning because according to Rivera, there are some factors that can make things a little tricky.
Take for instance a divorced couple with a child. The mother has custody and in 2006 filed Head of Household and qualified for the Earned Income Credit. Now, she chooses to take the Advanced EIC. She then files her tax return on March 1 2008. The father receives his W-2 and files his return on Feb. 1, 2008 and claims the EIC. What happens then?
"The husband will get the EIC and the wife will probably have a balance due," Rivera said.
If a taxpayer's situation changes after giving their employer Form W-5, or if the taxpayer no longer expects to qualify for the EIC or no longer wants to get the advance payments, the taxpayer should give their employer a new form.
JK Harris does assist clients who have filed the Earned Income Credit, but only if that credit had been disallowed in a previous year or years. The company contracts approximately 400 EIC clients per year.
In order for JK Harris to help a taxpayer claim the Earned Income Credit after a disallowance, a taxpayer must be able to answer "yes" to 10 qualifying questions and submit supporting documentation. This documentation can include, but is not limited to the following:
* Copies of birth certificates for each qualifying child, dependent child and/or dependent exemption.
* A copy of a social security card or other verification of the social security number of each qualifying child and/or dependent exemption.
* Documentation that clearly shows each qualifying child lived with the taxpayer more than six months of the year.
* A record of funds spent to support the qualifying child.
According to the IRS, nearly 3 million tax returns in 2004 were filed using the Earned Income Credit. That same year, 484 taxpayers contracted with JK Harris to claim the Earned Income Credit after disallowance.
About JK Harris & Company, LLC
JK Harris & Company, LLC, (www.jkharris.com) based in North Charleston, S.C., is the nation's largest tax resolution firm and has served over 200,000 customers since its founding in 1997 by John K. Harris. JK Harris consultants are available to meet with consumers in over 450 locations nationwide by appointment only. The company also provides services for consumer and commercial debt, student loan debt, investment fraud, financial planning, tax return preparation, and audit representation.
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