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One of the most often overlooked tax credits available to parents is the earned income tax credit (EITC).  Unfortunately for most folks, it's much more complicated than it needs to be.  However, if you can take a few moments to figure out if you qualify, the savings can be significant - even if you don't pay income taxes other than Social Security.

To qualify, you must be a US citizen or resident alien for the entire year (or nonresident alien married to a U.S. citizen or resident alien and filing a joint return) with a valid Social Security Number.   You cannot file your income tax return as married filing separately and you must have earned income from employment or from self-employment.  You must have a qualifying child or if you do not have a qualifying child, you must be between age 25 and 65, live in the United States for more than half the year, and not qualify as a dependent of another person.

Your child is a "qualifying child" if he or she is your child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling (or the child or grandchild of one of these) who lives at the same residence as you for at least half of the tax year and for whom you provided a majority of support.  Additionally, your child must be either under the age of 19, or under the age of 24 if he or she is a full time student for at least five months of the year, or be considered permanently and totally disabled.

For the 2006 tax year, if you have one qualifying child, your earned income and adjusted gross income (AGI) must be less than $32,001 or $34,001 married filing jointly.  With two or more children, the number jumps to $36,348 or $38,348 married filing jointly.  If you have no qualifying children, the number drops considerably to $12,120  or $14,120 married filing jointly).

And how much credit can you claim?  For the 2006 tax year, the maximum credit is $412 with no qualifying child, $2,747 with one qualifying child and $4,526 with two or more qualifying children.  Remember, those numbers are credits, not deductions, which means that they apply whether or not you itemize.

Think you might qualify?  The laws on the EITC can be confusing, so if you have any questions, consult with a tax professional, call IRS (1.800.829.1040) or try the IRS' handy dandy assistant on their web page.  However you check, don't miss out on this opportunity to put more dollars back in your pocket.