Tax Question... Having a child.
 

My sister in law had a kid and has been on unemployment all year. She had the kid Jan 30th last year (in 2009). So, she's be able to get the Earned Income Tax Credit, if I understand correctly.

Now, this tax credit which I see is up to $3047 for one child, do they actually send her a check for that amount if she doesn't owe any taxes? How exactly does that work?

She's from the US, obviously and we live in Ohio if it matters. Thanks guys.

Keep in mind I am asking just for opinions, not looking for free professional information LOL. So don't tell me to google it, I already did. Dont tell me to consult a tax person, as it's not my problem and I am just curious, for when my woman and I have a child. Thanks!

Well, this is what I can tell you. Traditionally, even on unemployment, most states automatically deduct income tax, so even w/o working she's probably "paid in" something.

Typically, you can't get back more than you've paid in, but I don't know about earned income tax credits, special rules may apply.

Here in Ohio we have the option to deduct taxes from unemployment income or not to, and she chose not to.

She has to have earned income within the tax year in order to get the Earned Income Tax Credit. Unemployment income is not considered earned income.

More info on the EITC
http://www.irs.gov/individuals/artic...=96406,00.html


Info on what is and isn't earned income
http://www.irs.gov/individuals/artic...176508,00.html

If someone is eligible it is a credit which is received if it is excess of taxes owed. IOW if you are eligible you get all of it or part of it net of your total tax due and any withholding or other credits.

She worked 28 days, from jan 1 to jan 28 before she popped her kid out. So with that earned income, like 700 dollars or so, I wonder if that would make her eligible since she actually earned the income. Or would the standard deductions and everything else end up cancelling her credit out?

For $700 and one child she's entitled to $247 in earned income credit.

Credits are applied on any tax she would have owed after her income taxes. They are applied to your tax bill. But if you have no taxes or less than the credit you do not get it in cash.

At least I think that is it but don't hold me to it. :)

You have to have earned above a certain amount and under a certain amount to get the credit.

You don't just get a check for the amount if you've been unemployed and aren't collecting a paycheck.

The keywords are "EARNED INCOME" of which she has none.

just go to taxactonline.com and you can do your return for free, they bring you through a series of questions...real easy. you can just join and do your return and see what your getting back...you don't have to send it but at least you will know the answer to your question.

Thanks for the input guys. I just wanted to see if you all knew anything. I am not going into it all myself, as it doesn't really matter to me what she gets, really. Mainly wanted to know for future reference, etc. Thanks!