Question 1

What is the Earned Income Tax Credit, and who qualifies?

Accepted Answer

The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund. You may claim the EITC if your income is low- to moderate.
 The amount of your credit may change if you have children or dependents, are disabled, or meet other criteria.
To qualify for the EITC, you must:

• Have earned income
 • Have investment income below the limit
 • Have a valid Social Security number by the due date of your return (including extensions)
 • Be a U.S. citizen or a resident alien all year
 • Not file Form 2555, Foreign Earned Income
 • Meet certain rules if you are separated from your spouse and not filing a joint tax return.

Question 2

What is the Premium Tax Credit? (updated February 24, 2022)

Accepted Answer

The Premium Tax Credit is a refundable tax credit designed to help eligible individuals and families with low or moderate incomes afford health insurance purchased through the Health Insurance Marketplace, also known as the Exchange. The size of your Premium Tax Credit is based on a sliding scale. Those who have a lower income get a larger credit to help cover the cost of their insurance.

Question 3

What is a new clean vehicle for purposes of the New Clean Vehicle Credit? (updated Oct. 6, 2023)

Accepted Answer

For purposes of the New Clean Vehicle Credit, a new clean vehicle is a clean vehicle placed in service on or after Jan. 1, 2023, that is acquired by a taxpayer for original use. In addition, to qualify for the credit, the vehicle:
 • Cannot be acquired for resale;

• Must be manufactured by a qualified manufacturer;

• Must meet the definition of a motor vehicle under Title II of the Clean Air Act (that is, any vehicle manufactured primarily for use on public streets, roads and highways. It must also have at least four wheels);

• Must have a gross vehicle weight rating of less than 14,000 pounds;

• Must be powered to a significant extent by an electric motor with a battery capacity of 7 kilowatt hours or more and must be capable of being recharged from an external source of electricity; and

• Must have final assembly in North America.

• Moreover, for a taxpayer to claim the credit, the seller of a new clean vehicle must provide a report containing taxpayer and vehicle information to the taxpayer and to the IRS.

Question 4

Who is eligible to claim the Employee Retention Credit? (updated Sept. 14, 2023)

Accepted Answer

Eligible employers can claim the ERC on an original or amended employment tax return for qualified wages paid between March 13, 2020, and Dec. 31, 2021. However, to be eligible, employers must have either:

• Sustained a full or partial suspension of operations due to an order from an appropriate governmental authority limiting commerce, travel or group meetings because of COVID-19 during 2020 or the first three quarters of 2021, or

• Experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021, or

• Qualified as a recovery startup business for the third or fourth quarters of 2021.

A self-employed individual who has employees and who otherwise meets the requirements to be an eligible employer may be eligible for the ERC based on qualified wages they paid to employees. Self-employed individuals can't include their own self-employment earnings or wages paid to related individuals when calculating the credit.

Question 5

What is the Work Opportunity Tax Credit?

Accepted Answer

Employers who hire individuals from certain targeted groups who have faced barriers to employment may qualify for the Work Opportunity Tax Credit (WOTC). The targeted groups are:

• The formerly incarcerated or those previously convicted of a felony;
 • Recipients of state assistance under part A of title IV of the Social Security Act (SSA);
 • Veterans;
 • Residents in areas designated as empowerment zones or rural renewal counties;
 • Individuals referred to an employer following completion of a rehabilitation plan or program;
 • Individuals whose families are recipients of supplemental nutrition assistance under the Food and Nutrition Act of 2008;
 • Recipients of supplemental security income benefits under title XVI of the SSA;
 • Individuals whose families are recipients of state assistance under part A of title IV of the SSA; and
 • Individuals experiencing long-term unemployment.
On or before the day that an offer of employment is made, the employer and the job applicant must complete Form 8850 (Pre-Screening Notice and Certification Request for the Work Opportunity Credit). The employer has 28 calendar days from the new employee’s start date to submit Form 8850 to the designated local agency in the state where the business is located (where the employee works).