University of Wisconsin - Extension

Farmers, farm laborers, seasonal workers and other working

families may be eligible for state and federal earned income tax credits

of up to $5,560 if they have been self-employed or been an employee at

some time during the past year.

Eligible families must earn less than $10,380 if they have no dependent

children; less than $27,413 with one child living at home for more than

half the year; or less than $31,152 with two or more children.

"The average family who qualifies receives federal and state credits

totaling more than $1,000," says Judi Bartfeld, University of

Wisconsin-Extension family resource management specialist. She is also a

UW-Madison professor in the School of Human Ecology.

"In 1998, the average federal EITC payment in Wisconsin was $1,418, and

the average state payment was $317. Earned income dollars are usually

spent locally to pay bills, providing an important source of revenue to

communities."

To take advantage of the credit, families with children must:

- File either the 1040 or 1040A tax form and Schedule EIC for the

federal credit.

- File tax form 1 or 1A and claim the state credit using their

federal EIC amount.

- Supply the social security numbers of any dependent children

claimed.

State tax credits aren't available to people without children. Bartfeld

says the tax credit is designed to help working families pay bills and

child care costs.

Salaries, wages, self-employed earnings, military pay and allowances,

and disability pay are considered earned income. Child support, alimony,

social security benefits, and grants from state and federal assistance

programs like Wisconsin Works (W-2) and food stamps are not counted as

earned income.

"Farm income is considered self-employment income, so it qualifies for

the earned income credit. Even if a family experiences no farm income

during a year because of losses or other factors, if some sort of

non-farm income is earned, a family meeting the income guidelines may be

eligible for a refund," Bartfeld says.

Eligible families who did not file during the past three years can still

file amended forms to receive credits from previous years. Bartfeld says

families with children who make from $8,000 to $12,000 are eligible for

the largest credit -- up to $3,888 from the federal government and $1,672

from the state if the family has three or more children.

For free tax help, ask at your local library about the Volunteer Income

Tax Assistance (VITA) program. Tax forms are available from the Internal

Revenue Service and the Wisconsin Department of Revenue. For more

information, call the IRS at (800) 829-1040.