Washington (Jan. 31, 2003) -- Changes in the Earned Income Tax Credit law will greatly expand the number of low-income working taxpayers who qualify for tax relief, according to the Internal Revenue Service. The changes especially affect military personnel.
"More hard-working Americans can receive tax relief or even a tax refund because of changes in this credit. We want all those who are eligible, but only those who are eligible, to apply," said Acting IRS Commissioner Bob Wenzel. "The IRS and its network of volunteers are ready to help taxpayers complete accurate returns on this complex issue."
Both the income limits and the maximum credit have increased for the 2002 tax year with the automatic cost of living calculations. To be eligible for a full or partial credit, a couple filing jointly, with two or more qualifying children, must have an adjusted gross income of less than $34,178. The maximum earned income credit is $4,140 for families with two or more qualifying children, $2,506 for families with one qualifying child and $376 for an individual without children.
Among the significant changes for the 2002 tax year was a redefinition of what constitutes earned income. Earned income no longer includes nontaxable income such as military pay for housing, subsistence allowances or combat. This change will expand the number of military personnel who may be eligible for the credit. Also benefiting are people who participate in salary deferral plans such as 401(k) and Thrift Savings or people who receive excludable employer-provided benefits such as dependent care benefits.
-- Electronic Accountant Newswire staff
