You’ve received a letter—seemingly from the IRS—stating that you may qualify for an additional tax credit. In this age of heightened concerns surrounding identity theft, you’re suspicious about the letter’s legitimacy. Would the IRS really go out of their way to help you save a few bucks?
It may surprise you to learn that the answer is yes. If, after submitting your tax return, the IRS reviews your records and determines that you may have qualified for an Earned Income Tax Credit (EITC) which you didn’t claim, they may send you a letter, giving you the opportunity to get the tax break you deserve.
The EITC is a significant tax break available to tax payers meeting certain requirements. To qualify, you must have a valid Social Security Number and earn an income (either through a job or self-employment) that does not exceed a certain amount. This income limit is contingent upon whether you have any dependent children living with you (and if you do, how many you have) as well as whether you’re filing individually or jointly with a spouse.
The IRS may send you a letter regarding the EITC for any of the following reasons:
- You did not claim an EITC tax break on your return, and it believes you deserve one.
- You claimed an EITC tax break, but the IRS is uncertain you qualify. It requests more information.
- You claimed an EITC tax break, but your records don’t match those of the IRS, or the IRS believes there was an error in your return.
- You claimed an EITC tax break, but the IRS has disallowed your claim. This normally happens when a tax payer intentionally commits fraud.
The EITC can be an excellent way to reduce the amount of taxes you owe and can even lead to a considerable refund. The IRS provides a free tool to help you determine whether you qualify.