When your home is destroyed by an act of God, you expect to be uprooted and face a long road of financial difficulty ahead.
Recognizing that hardship, the IRS wants to provide a hand-up that could amount to a refund of several thousand additional dollars when you go to file your taxes this year.
IRS relaxes rules for EITC in disaster zones
For those who lived in an area of the country affected by Hurricanes Harvey, Irma or Maria last year, the IRS says it will relax the rules to allow more people to qualify for the Earned Income Tax Credit (EITC).
People who experienced an income drop as a result of living in a hurricane disaster area during 2017 will be encouraged to use a “special computation method” to figure out their tax returns this season.
The method involves letting taxpayers who took an income hit last year to figure the EITC using their 2016 earned income rather than their 2017 earned income.
That may allow them to qualify for the EITC when they might otherwise not.
The IRS is asking taxpayers to figure the credit both ways — that is, the regular way using 2017 earned income, and the special way using 2016 earned income — and claim whichever approach will net them the larger refund.
The EITC can really benefit families and individuals
For those who aren’t familiar with it, the EITC is aimed at workers on the low to moderate end of the income scale who earned $53,930 or less in 2017.
Claiming the EITC adds an average of $2,445 to refunds — though that varies based on income, family size and other factors.
For working families, the benefit tends to be larger — up to $6,318.
Yet workers without a qualifying child can benefit, too; those with incomes below $20,600 may be eligible for a smaller credit of up to $510.
To qualify for the EITC, you must have earned income and meet other basic rules.
The typical person who qualifies might be someone who works from home, works in the so-called “gig” or sharing economy, or who works in the service, construction and agriculture sector, according to the IRS.
Even receiving some kinds of disability payments could qualify you for the EITC!
You can determine if your exact situation fits the requirements by using the EITC Assistant on the IRS website.
But note this: You must file a tax return to get the credit — even if you owe no tax or aren’t normally required to file.
Fortunately, you can file quickly and easily at absolutely no cost to you through the IRS Free File program.
The IRS will begin accepting returns on January 29. But even if you file that very day, don’t expect to get your refund before February 27.
That’s because the IRS is required to hold any refund involving the EITC until mid-February to detect fraud and prevent errors.
So February 27 is the earliest any refund would potentially be available to you — assuming everything else goes smoothly with your return and you opt for direct deposit!
Mark your calendar: Key 2018 tax dates to know!
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