Advance EITC. Lower-wage workers might already be familiar with the earned income tax credit, or EITC, offered by the Internal Revenue Service. But there is no need to wait for next year, according to advice presented recently by the IRS. If you meet the requirements for an EITC, you could be eligible for the advanced EITC, a tax credit right now that could mean larger paychecks this summer.
To receive part of the credit with your pay, you must expect to have at least one qualifying child for this year, expect to fall within certain income limits, and expect to meet certain other conditions. You cannot get the Advance EIC if you do not expect to have a qualifying child, even if you expect to be eligible to claim the EIC on your current year tax return.
To see if you qualify, ask your employer for the current year form W-5, earned income credit advance payment certificate. If you qualify, complete a W-5 and give it to your employer. Your employer will then add the advance earned income credit to your net pay for each pay period you are eligible.
You are allowed only one form W-5 with a current employer at one time. If you and your spouse are both employed, each of you must file a separate Form W-5.
Gambling. Just because it is summer it doesn’t mean people won’t visit Atlantic City. But should you parlay a big score at the track or the casinos, the IRS will need to know about it.
Gambling winnings, which among other things include winnings from lotteries, raffles, horse races, casinos, and sweepstakes are — and the prize doesn’t necessarily have to be money, it could be a car or a trip — are fully taxable and must be reported on your tax return.
Anyone who pays your winnings or awards you a prize is required to declare it themselves, if your winnings are over a certain amount. However, all gambling winnings must be reported regardless of whether any portion is subject to withholding. Plus, you might be required to pay an estimated tax on your gambling winnings.
On the other hand, if your luck doesn’t hold out, you are allowed to deduct gambling losses. But only if you itemize deductions and only if you also have gambling winnings. Keep an accurate record of your gambling winnings and losses — you will have to provide receipts, tickets, statements, or other records that show both your winnings and losses.
For more information about the AEITC or reporting gambling income, visit www.irs.gov, or call 800-TAX-FORM (800-829-3676).