A couple of years ago, when I was hanging out at an AccountAbility free tax prep site, I saw a family walk away with a larger refund because they qualified for the Earned Income Tax Credit. The EITC is a credit for people who work but don't earn high income.

The extra cash, which they had not expected, was going to help this family pay some outstanding bills. Hopefully there was a little left over to save.

The IRS declared January 29 EITC awareness day because an estimated one in four taxpayers who qualify for the refundable tax credit don't claim it.

Nearly 24 million people received $50 billion in benefits with an average credit exceeding $2,000, the IRS said.

About 292,200 individuals or families received an average $1,810 EITC in Minnesota last year.

The agency is expecting even more people to qualify this year because of the numbers of workers dealing with job loss or reduced incomes.

This year, the credit is even more generous. "As part of the economic recovery efforts, there have been important changes to expand EITC to benefit taxpayers," said IRS Commissioner Doug Shulman. "Today, more than ever, hard-working individuals and families can use a little extra help. EITC can make the lives of working people a little easier."

Here's the skinny, courtesy of the IRS:

To qualify for the EITC, earned income and adjusted gross income (AGI) for individuals must each be less than:

  • $43,279 ($48,279 married filing jointly) with three or more qualifying children
  • $40,295 ($45,295 married filing jointly) with two qualifying children
  • $35,463 ($40,463 married filing jointly) with one qualifying child
  • $13,440 ($18,440 married filing jointly) with no qualifying children

The maximum credit for tax year 2009 is:

  • $5,657 with three or more qualifying children
  • $5,028 with two qualifying children * $3,043 with one qualifying child
  • $457 with no qualifying children

For more info, visit www.irs.gov/eitc. While you're there, check out the details on free tax preparation sites. If you qualify for EITC, you qualify for free tax preparation from an IRS partner site.

Because direct deposit enables the IRS and Minnesota Department of Revenue to get you your refund within days of filing, I'm hopeful that fewer people will rely on horrible predatory refund anticipation loans this year.

Predatory refund anticipation loans strip tens if not hundreds of dollars from the tax refunds of citizens who can afford it the least.

If you absolutely cannot wait, AccountAbility, the Minnesota non-profit which runs many of the free sites in the state, offers an alternative to predatory refund anticipation loans.