Earned Income Credit (EIC) is a special tax benefit for people who work. Eligible families and single workers can file federal and state income tax returns and a "Schedule EIC" form. If a qualifying family owes income tax, EIC reduces the amount of taxes owed. If your EIC is more than your tax bill (even if you don’t owe any taxes) you will receive a check for the difference. Families already due a refund get the amount of the EIC added to the refund check.

There are two ways to get the credit - when you file your tax return or in your paycheck, by having it paid to you "in advance" (Advance EIC).

For possible further benefits, check your old tax records or complete an Earned Income Credit Advance Payment Certificate. If you qualified in past years, you may file for an EIC up to three years retroactively.

Q.  Am I eligible?

Those eligible include:

• Single workers between the ages of 25 and 64 and earning $11,060 or less per year are eligible for up to $376.
• Families earning $30,201 or less and caring for one child may receive up to $2,506.
• Families earning $34,178 or less, who are caring for two or more children, are entitled to as much as $4,140.

New York State has an EIC tax benefit too. You receive 27.5% of your federal benefit as a state credit - money in addition to the federal benefit.

Q.  Will EIC reduce other government benefits?

In almost all cases, no. Some families eligible for the EIC also receive benefits under other government programs, including food stamps, SSI, Medicaid, Temporary Assistance for Needy Families and public or subsidized housing. Only in rare cases will the EIC lower benefits in these other programs.

Q.  Are there any special tax services that I should know about?

• Free tax help for low-and-middle income taxpayers is available through the VITA (Volunteer Income Tax Assistance) program. To find the VITA site nearest you, call 1-800-829-1040.
• To order federal tax forms, call 1-800-829-FORM.

Families who have work-related child care expenses are eligible for a federal Child and Dependent Care Credit up to $720 for one qualifying child and up to $1,440 for two or more qualifying children. New York State will provide a refundable credit for up to 110% of the federal credit for eligible taxpayers.

This benefit also covers care of a spouse or dependent incapable of caring for himself or herself.

The amount of the credit is based on income, the number of dependents in care and the amount paid for care. Specifically, you may claim up to $2,400 for one child and $4,800 for two or more children when calculating the credit.

Q.  What kind of child care qualifies?

Any type of child care qualifies as long as you pay for the care. The care may not be provided by a spouse, dependent or a child who was under the age of 19 at the end of 2002.

Q.  How do I claim the Child and Dependent Care Credit?

Taking advantage of the Child and Dependent Care Credit involves filing a separate form or schedule with your tax return. With tax for 1040, file form 2441. With tax for 1040A, file a Schedule 2 form.

Couples married at the end of 2002 must generally file a joint return to take the credit, although some special rules apply if you are living apart from your spouse.

Q.  If my employer provides child care benefits, can I still take the credit?

Yes, but the amount of the employer-provided benefits must be subtracted from the child care expenses that may be claimed under the credit.

Q.  What if my income is so low that I don’t owe taxes, can I still take the Child and Dependent Care Credit?

It depends. Not at the federal level, but since the state credit is refundable, you would receive any excess credit above your tax liability in the form of a refund. Even if you owe a small amount in taxes, claiming the Child and Dependent Care Credit can increase the amount of refund you may otherwise get.

This is not the case with the Earned Income Credit. Even if you don’t owe any taxes, you can still receive the credit from both the federal and state governments. If you’re eligible for EIC and CDCC, you can take both credits in the same year.

The STAR tax reduction is a New York State Program that lowers property tax for all homeowners who own property that is their primary residence. STAR saves homeowners between $180 and $350 a year on their property taxes. However, according to the New York City Department of Finance, the agency that administers NYC property taxes and tax exemption programs, thousands of New York City households are eligible for the STAR program but have not yet applied.

If you own a 1, 2, or 3 family home, a condominium, a cooperative, or any property that is your primary residence, all you have to do to lower your real estate taxes is apply for STAR.

To make it easier, in late summer-early fall 2003, the Department of Finance sent an application for basic STAR benefits to each homeowner who seems to be eligible but who does not currently have STAR benefits. If you receive this application, complete it and return it as soon as possible. Almost everyone who owns his or her primary residence will qualify for STAR.

If you indicate on the application that you are age 65 or over and have a total 2002 income of less than $63,750, the Department of Finance will also send you a second application for "Enhanced" STAR benefits, which saves qualified seniors even more money on their property taxes.

If you do not currently have STAR benefits, it is very important that you enroll in STAR this fall. Not only will STAR reduce your property taxes next year, but it will also help you avoid future tax increases that might be imposed on owners who do not occupy the properties they own.

Finally, if you are a veteran, a veteran’s spouse or widow, or the parents of a veteran killed in the line of duty, you may also be eligible for the Veteran’s Property Tax Reduction. There are also property tax reductions for senior citizens and disabled homeowners who have very limited incomes.

To obtain information about STAR or any of the other property tax reduction programs, call the Department of Finance Customer Assistance at (718) 935-9500, listen to the taped information at (718) 935-6736 or go to www.nyc.gov/finance and click on Real Estate Tax and select Tax Exemption from the menu provided.