As many people who follow the news and politics are aware, Congress and President Obama are in the first rounds of negotiations and proposals for a tax code overhaul. As we discussed in a previous post, there are many unresolved issues in the tax code that need to be addressed, particularly in the area of tax breaks for low income families and small business owners (among others). One area of contention is the Earned Income Tax Credit, which provides a tax credit for people who earn less than $14,790 per year. This tax credit along with the Child Tax Credit currently applies to 32 million families nationwide.
At the present time, the tax credit is available mainly for the working poor who have children and offers a maximum refund of $503 per year. In addition to adding eligible taxpayers who do not have children, the proposal also includes more workers by widening the age range by several years on either side and by increasing the income cap for claiming the credit.