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California online Form 1040 (Schedule Eic): What You Should Know
Read this information first. Complete the Illinois Exemption Information Statement for EIC and then complete the Earned Income Tax Credit Statement. You must complete both the Illinois Exemption and the Earned Income Tax Credit Statements. Earned Income Tax Credit (ETC) This is a credit provided under Federal laws to reduce the amount of Federal income taxes you owe, based upon your family's income, and is designed to increase the amount of income tax paid by the individuals receiving the credit. Federal rules state that the ETC can be a credit, deduction, exclusion, refund, credit, credit allowed, limitation, credit amount, or credit percentage. The ETC is usually refundable to taxpayers and is earned income in the eyes of the Internal Revenue Service. Learn more about the ETC here. Child Tax Credit & Earned Income Credit.pdf If you pay income tax but have not filed the Federal Income Tax Return (Form 1040 or 1040A), you may be eligible for a credit of up to 2,000. The credit is reduced by the amount of state income tax you owe or that is refundable. Some credits may also be claimed as an adjustment to your Federal income tax. Learn more here. Paying Your Earned Income Credit from IRS The IRS will ask you if you have paid the ETC that is due on a state return as well as a form 1040A. The IRS takes this information into account when computing your creditable tax, up to the amount of the ETC you owe. The Earned Income Tax Credit is a nonrefundable credit, meaning you will not receive a refund of this amount. If you do not have enough federal tax to claim the ETC you will not, however, be subject to the Alternative Minimum Tax or Medicare tax. You can also claim the ETC without filing Form 1040 using Form W-2G. This works because state tax withholding does not affect federal tax. However, you will be required to do a separate state income tax return with Form 1040 when you have the ETC credit available. California Earned Income Tax Credit In California, California taxpayers who are age 62 or older, and are not eligible for other tax credits, can receive a one-time 800 tax credit by filing an alternative form of tax credit called California Earned Income Tax Credit (Calcite). Read this information first.
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