The earned income credit (EIC) is a major tax credit that is specifically designed for lower income working families and individuals. The amount of the credit varies depending on your level of income and how many dependents you support. You can claim this credit with or without qualifying children, but greater tax credit is given to those who have qualifying children. This credit can be valued at over $6,000 if you have three or more qualifying children. The earned income credit is a refundable credit, which means that you will receive a tax refund whether or not you had any taxable income.
As the name implies, the earned income credit is provided as an incentive for individuals to work. Consequently, to qualify for this credit, you must have some form of earned income during the year. Earned income includes wages you get from working, and Read More
If you hire someone to do household work and that person is considered your employee, you may be liable for paying employer related taxes. Although it is commonly called the “Nanny Tax” it covers more than just nannies, it includes workers who perform household work, which the IRS defines as “work done in or around your home”. This definition captures babysitters, yard workers, drivers, private nurses, private cooks, etc.
Your first task is to determine if the person you hired is your employee or is self-employed. The worker is your employee if you control what work is done and how it is done. The household worker may have been sent to you by an agency but if you control what work is done and how it is done the worker is still considered your employee. Whether the worker is part-time or full-time or is paid daily, weekly, hourly or for each job is not relevant once Read More