North Dakotans may be able to take advantage of the earned income and child tax credits, says Debra Pankow, North Dakota State University Extension Service family economics specialist.

The earned income tax credit (EITC) helps low- and moderate-income families keep more of what they earned. The child tax credit (CTC) could reduce a family’s federal income tax by up to $1,000 per qualifying child.

“If you worked in 2011, had children living with you and earned less than about $46,000, or did not have children living with you and earned less than about $13,600, you could qualify for the earned income credit (and child tax credit if you have children),” Pankow says. “The tax credit could be as high as $5,761 - or more.”

In 2011, 43,244 North Dakotans received earned income tax credits totaling $82.66 million. Taxpayers received an average of $1,912. Nationwide, more than 26 million people received nearly $59 billion.

To claim an EITC on your tax return, you need to meet all of the following criteria:

• You have a valid Social Security number
• You have earned income from an employer, self-employment or another source
• You can’t use the “married, filing separate” filing status
• You must be a U.S. citizen or resident alien all year, a nonresident alien married to a U.S. citizen, or a resident alien and you and your spouse are filing a joint return
• You are not a qualifying child of another person
• You can’t file Form 2555 or 2555-EZ, which are related to foreign earned income
• Your adjusted gross income, earned income and investment income can’t exceed certain limits

Changes in the EITC for 2012 mean some families could receive even larger amounts this year, Pankow says. For example, larger families with three or more children will receive more benefits. Also, EITC income limits for married workers have been raised.

For more information about the EITC, visit the Internal Revenue Service’s website at http://www.irs.gov/individuals/article/0,,id=96466,00.html.

To claim the CTC, families must have at least one qualifying child. A qualifying child:

• Was under the age of 17 at the end of 2011
• Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, such as your grandchild, niece or nephew
• Did not provide more than half of his or her own support in 2011
• Is claimed as a dependent on your federal tax return
• Is a U.S. citizen, U.S. national or U.S. resident alien
• Must have lived with you for more than half of 2011

For more information about the CTC, visit the IRS’s website at http://www.irs.gov/publications/p972/ar02.html.

For information from the NDSU Extension Service on spending your tax refund wisely, visit http://www.ag.ndsu.edu/money/smart_uses_tax_refund_10.pdf.

NDSU Agriculture Communication - Jan. 6, 2012