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It’s Your Money – You Earned It – Now Claim It

Generally Native Americans pay federal income tax on earnings with the exception of income exempt by specific treaty, agreement, or Act of Congress. For example, tribes in Oregon and Washington have fishing rights established by treaties with the U.S., so income from fishing by tribal members is exempt from federal income tax.

Some examples of earned income are wages, salaries, tips, net earnings from self-employment, union strike benefits, employer-paid disability benefits and military combat pay. Earned income does not include unemployment, alimony and child support, interest on bank accounts, investment income and non-taxable payroll deductions for dependent care or retirement plans or public benefits such as , Social Security, SSI, and welfare,

If your income is not exempt from federal income tax, there are two credits you should know about; the Earned Income Tax Credit and the Child Tax Credit. These credits help workers keep working and care for themselves and their children. The money can be used for child care, auto repairs, transportation, medical expenses and to catch up on rent and utilities, to name a few ways the money can help workers care for themselves and their children.

How Much Can Workers Earn And Still Qualify for the Earned Income Tax Credit (EITC)?

For Tax Year 2013:

Number of Children: Income Less Than: EITC up to:

3 or more children $46,227 $6,044

2 children $43,038 $5,372

1 child $37,870 $3,250

No Children $14,340 $487

• Investment income cannot exceed $ 3,300.

• Workers claiming the credit and not raising children must be between the ages of 25 and 64.

How Much Can Workers Earn and Qualify For the Child Tax Credit (CTC)?

Workers who earned more than $ 3,000 in 2013 can get a CTC refund.

Income less than Filing Status
$ 110,000 Married
$ 75,000 Single or Head of Household
$ 55,000 Married filing separately

The CTC is worth up to $ 1, 000 for each qualifying child.

The CTC first reduces or eliminates any income tax owed. Then, workers may get any remaining CTC as an additional refund. The family can get the amount of the CTC that remains after income tax is eliminated, or 15% of the family’s taxable earned income over $ 3,000, whichever is less.

Definition of a “Qualifying Child” for claiming the EITC and the CTC.

EITC

  • Relationship: Son, daughter, grandchild, stepchild, adopted child, brother, sister, stepbrother, stepsister (or their descendants) or a foster child placed by a government agency.
  • Residence: Must live with worker in the U.S. for more than half the year.
  • Age: Under 19 or under 24 if full-time student or any age if totally disabled

CTC

  • Under 17

If you are a qualifying child, you cannot claim the EITC yourself.

If a child is claimed for both the EITC and CTC, the same worker must claim both credits.

There is an exemption for non-custodial parents to claim the CTC but not the EITC. If a non-custodial parent is permitted to claim a child as a dependent as part of a divorce or separation agreement, the parent can claim the child for the CTC. The non-custodial parent must attach IRS Form 8332, “Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent,” to their tax return. The Form requires the custodial parent’s signature. There is no exemption for the non-custodial parent to claim the EITC.

To claim the EITC, married workers must file a joint tax return with one exception:

A separated parent can claim the EITC without filing a joint tax return with the other parent if:

  1. The parents have lived apart for the last six months of the year.
  2. The child lived with one of the parents for more than half of the year.
  3. That parent paid more than half the cost of maintaining the household for the year and is eligible to claim the child as a qualifying child.

Under these circumstances , the parent living with the child is considered unmarried for tax purposes and can file as “head of household” and may claim the EITC. 

Publication Volume: 
2013.1
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