Earned Income Credit ???'s for First-Timer . . .

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captmccrae
Posts: 7
Joined: Fri Dec 30, 2016 2:06 pm

Earned Income Credit ???'s for First-Timer . . .

Post by captmccrae » Tue Sep 12, 2017 7:54 am

So got to thinking (dangerous thing) and think my wife and I might be able to get some $$$$ from Earned Income Credit.

Here's overview:

--AGI last year of 59k. Put 32k between us in 401k's last year. We got a little back from Saver's Credit

--Maxing out both our 401ks this year (so 36k) and started 457 too (we are lucky to be able to do both). 12k in 457 plan.

--Salary a bit more this year, but adding in extra 4k and 12k from 457 means AGI should be about 44k.

--We have one child. EIC limit for that is 44,846. I think we are going to make it. Could also open pre-tax IRA to lower AGI even more.


EIC says "earned income and AGI must be lower than . . . ". Earned income reduced by 401k and 457 and potential IRA contributions, correct?


So does that look about right? Any suggestions / comments?

Thanks!

teen persuasion
Posts: 306
Joined: Sun Oct 25, 2015 1:43 pm

Re: Earned Income Credit ???'s for First-Timer . . .

Post by teen persuasion » Tue Sep 12, 2017 8:05 am

Looking up $44k AGI in the 2016 EITC chart, MFJ with one child is about $130 credit.

Contributions to tIRA usually don't increase EITC, unlike payroll retirement contributions. This is because the credit is calculated twice, once on line 7 wages, and again on AGI. Your credit is whichever credit calculation is LOWER, so you need both line 7 and AGI lower to benefit. TIRA contributions can't reduce line 7.

Check to see if your state has an analogous credit. I'm in NY, and they match EITC at 30%.

Also check the investment income limitation. If your investment income is > $3400, you are ineligible for EITC, regardless of AGI.

Runner01
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Joined: Thu Dec 12, 2013 7:14 pm

Re: Earned Income Credit ???'s for First-Timer . . .

Post by Runner01 » Tue Sep 12, 2017 8:30 am

This will be the second year that we are eligible for the EITC and I can confirm that tIRA contributions have not increased our EITC. You could however contribute to a tIRA enough to push yourself into the 20% savers credit tier (less than $40k AGI). Do you have access to an HSA? Contributions made through your employer will increase your EITC.

captmccrae
Posts: 7
Joined: Fri Dec 30, 2016 2:06 pm

Re: Earned Income Credit ???'s for First-Timer . . .

Post by captmccrae » Tue Sep 12, 2017 10:40 am

teen persuasion wrote:
Tue Sep 12, 2017 8:05 am

Also check the investment income limitation. If your investment income is > $3400, you are ineligible for EITC, regardless of AGI.
That's just line 8a, right? Should be good w/ that if that's the case. Just some CD interest and money market, nothing crazy (~2k)

NC got rid of state EITC. Bummer.

teen persuasion
Posts: 306
Joined: Sun Oct 25, 2015 1:43 pm

Re: Earned Income Credit ???'s for First-Timer . . .

Post by teen persuasion » Tue Sep 12, 2017 12:11 pm

captmccrae wrote:
Tue Sep 12, 2017 10:40 am
teen persuasion wrote:
Tue Sep 12, 2017 8:05 am

Also check the investment income limitation. If your investment income is > $3400, you are ineligible for EITC, regardless of AGI.
That's just line 8a, right? Should be good w/ that if that's the case. Just some CD interest and money market, nothing crazy (~2k)

NC got rid of state EITC. Bummer.
Line 8a + 8b + 9a +10, according to the EITC instructions.

captmccrae
Posts: 7
Joined: Fri Dec 30, 2016 2:06 pm

Re: Earned Income Credit ???'s for First-Timer . . .

Post by captmccrae » Tue Sep 12, 2017 1:40 pm

Thanks. Should be good.

Not a huge credit, but if not a lot of work, might as well try for it. Hope the sheet isn't crazy long or tough to fill out

pshonore
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Joined: Sun Jun 28, 2009 2:21 pm

Re: Earned Income Credit ???'s for First-Timer . . .

Post by pshonore » Tue Sep 12, 2017 2:54 pm

captmccrae wrote:
Tue Sep 12, 2017 1:40 pm
Thanks. Should be good.

Not a huge credit, but if not a lot of work, might as well try for it. Hope the sheet isn't crazy long or tough to fill out
The IRS does review EITC returns in great detail so if you want avoid detailed scrutiny of your return and possibly a delayed refund, you may want to forego EITC. (I prepared hundreds of them and they're a lot of work for the preparer). On the other hand, if your return contains nothing out of the ordinary, then go for it. One other thing, does your State give an EITC Credit? Some do.

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