Not every single mom will qualify for the earned income
credit. It's designed to give tax breaks to low-income wage earners, and gives
the highest benefit to workers with two or more children. The paperwork
involved can be intimidating, especially the first year you take the credit,
but it's worth the hassle. The maximum credit for 2004 returns was $4,300, and
the amount is adjusted every year for inflation. You qualify to take the earned
income credit if:
Your wages are relatively low. In 2004, a single or
head of household filer could earn no more than $30,338 with one child, or
$35,458 with two children.
You must file using single, married filing jointly
(total family income can exceed the above requirements by $1,000), or
head-of-household filing status.
Your investment income cannot exceed $2,650.
Your child or children must be younger than 19 years
old.
Your child or children must have lived with you for
more than half the year.
For answers to more questions about the earned income
credit, look in the instruction booklet that accompanies any of the 1040 forms.
IRS publication 596, Earned Income Credit, is another excellent source of
information.