Little known tax credit could save you thousands

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Knoxville (WVLT) - It could give you thousands of dollars for free, but most people who can get their hands on the cash never try.

It's the called the federal earned income tax credit.

Volunteer TV's Mike McCarthy's looked into how you can get it.

The only major catch here - There are income requirements. The credit's mainly for families who earn less than 40,000 dollars. Sure, the tax deadline's still three months away, but with a little work now, tax day could become another pay day. All you have to do is ask.

Tax time can be taxing, but asking one question.

"People really have everything to gain and nothing to fear," said Barbara Kelly from the Community Action Committee.

...could make it rewarding.

"We do know we're not reaching everyone that could benefit," Kelly said.

Benefit from the Federal Earned Income Tax Credit.

"It's a benefit where the federal government will provide income tax return to you," Kelly said.

As much as $4,700, based on your income and family size. According to the I.R.S., families with one child who earn less than $33,241(or less than $35,241 of married workers) could receive a credit of up to $2,853. If you're a family with two children and earn less than $37,783 (or less than $39,783 of married workers), you're eligible for a credit of up to $4,716. Workers without a qualifying child who earn less than $12,590 (or less than $14,590 for married workers), could get up to $428.

"Generally it's for people whose income are 40,000 dollars or less," Kelly said.

The main requirement: you have to work. Even if you didn't make enough money to pay the IRS, the IRS could still pay you.

"This is kind of a reverse situation, where based on income and family size, you can receive and benefit rather than pay the IRS," Kelly said.

Barbara Kelly's the executive director for Knoxville's Community Action Committee. Last year, CAC's computers helped 250 low-to-moderate income families file their taxes for free.

"I can't tell you how many qualified, but I can tell you that over $200,000 was refunded to our clients," said Sue Campbell from the Community Action Committee.

That's just Knox County. Nationwide, the IRS handed out more than 43 billion dollars in Earned Income Tax Credit. If you've been eligible in previous years, but didn't fill out the paperwork, it's not too late. In most cases, you're allowed to file three years in back taxes.

"The income level is such that people would've received all their taxes back anyway," Campbell said.

So if you're not sure if you qualify..all you have to do is ask.

The Community Action Committee offers free and confidential tax assistance. The service is also for anyone whose income is around $40,000 or less. You can begin taking advantage of that Monday january 28th.

If you're a procrastinator, it's offered all the way through April 14th.

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