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Obama and the Earned Income Tax Credit: What You Must Know Now

President Barack Obama's new budget proposal is out, and it includes a key provision concerning the earned income tax credit. But many people don't even know what this credit is, let alone how it could help them.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at the earned income tax credit proposal in the Obama budget. Dan notes that the credit is currently generous to those with children: Those with three or more children can receive maximum credits of more than $6,000. However, those with no children get maximum credits of roughly $500. The Obama budget would change that, doubling the credit and boosting the income levels at which the earned income tax credit currently phases out. With the idea of encouraging people to work and offsetting the impact of payroll taxes on low-income workers, the earned income tax credit is a solution that members of both parties have supported in the past, so Dan concludes that the idea could survive even if the budget on the whole has little chance of passing.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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