UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: tmeri Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1490  
Subject: Tax Goodies For Low Income Workers Date: 3/22/2004 3:42 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 6
Well I seem to be unable to make a post here without stirring up controversy. First I suggested that you look for free admission to the museum, but that seems to be immoral on some level. Then I tried to kill people by suggesting they eat old chicken. And yesterday, well, nevermind.

But I'm going to give it another try, anyway. Go ahead, Fool Alert me. I don't care. ;-)


I know that some of you, though you consider yourselves to be retired, have earned a little income last year. This post is for you and for anyone else who is working even if they are not yet retired.

If you worked just a little bit last year, there are two things in the tax code that might apply to you and for which you'd get tax credits. Tax credits are much better than deductions. Both of these provisions limit total income and require that you have some earned income. Pensions, dividends, capital gains, etc. do not count as earned income but do affect your total income. You need something like a job or self-employment to get earned income.


Tax Credit for IRA Contribution

http://www.irs.gov/publications/p590/ch04.html


From the IRS website:

You may be able to take a tax credit if you make eligible contributions (defined later) to a qualified retirement plan, an eligible deferred compensation plan, or an individual retirement arrangement (IRA). You may be able to take a credit of up to $1,000 (up to $2,000 if filing jointly). This credit could reduce the federal income tax you pay dollar for dollar.
Can you claim the credit? If you make eligible contributions to a qualified retirement plan, an eligible deferred compensation plan, or an IRA, you can claim the credit if all of the following apply.

1. You were born before January 2, 1986.
2. You are not a full-time student (explained later).
3. No one else, such as your parent(s), claims an exemption for you
on their tax return.
4. Your adjusted gross income (defined later) is not more than:
1. $50,000 if your filing status is married filing jointly,
2. $37,500 if your filing status is head of household (with
qualifying person), or
3. $25,000 if your filing status is single, married filing
separately, or qualifying widow(er) with dependent child.




Earned Income Tax Credit

http://www.irs.gov/individuals/article/0,,id=96406,00.html


I always thought you had to have a dependent to qualify for this. Apparently not so. From the website:

To qualify for the credit, both the earned income and the adjusted gross income for 2003 must be less than $29,666 for a taxpayer with one qualifying child ($30,666 for married filing jointly), $33,692 for a taxpayer with more than one qualifying child ($34,692 for married filing jointly), and $11,230 for a taxpayer with no qualifying children ($12,230 for married filing jointly). The EITC Eligibility Checklist on the last page of IRS' Publication 596 , Earned Income Credit, may be used to quickly determine eligibility for the credit.


If you've already filed your income taxes for 2003, it's not too late. You might be able to file an amended return. And you have until April 15 to make a 2003 contribution to an IRA.

- tmeri
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Post of the Day:
Apple

Apple and Ninety Years Ago
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement