Low and moderate-income earners are the beneficiary earned income tax credit, aka EITC or EIC. The program pays between $560 to $6,935 for the 2022 tax year but depends on your income, filing status, and the number of children. The 2023 tax year adjusted the winnings to be worth $600 to $7,430 and included people without children. If you are qualified for EITC, ensure you claim it in your next taxes.
Additionally, those who haven't claimed their past earned Income tax Credit (for the last three years) can send an amended tax return to the IRS. This article contains earned income tax credit information, including how to qualify for and claim the credit. Read on!
The scheme is considered a work bonus plan to help low-income workers offset some Social Security taxes. You can consider it a poverty alleviation scheme. The program is for taxpayers with low to moderate earnings with or without dependents.
For the 2021 tax year, a taxpayer, whether married, filing jointly or not, with or without qualified children of 19 years, must spend half of the year living in the US to qualify. Additionally, qualified children include those under 19 years, students under 24 years, or dependents with a disability. The IRS relies on your filing status and the number of dependents to conclude the credit percentage, credit amount, and earning cap. It also determines the payment range before hitting zero. You can't be paid above the threshold.
To qualify for EITC, a taxpayer must have a source of income, excluding investment income of about $10,000 for 2021. The qualification also examines the dependent's age, relationship, and residency. Additionally, the credit reduces your tax debt, and you can qualify if your EITC is higher than the debt.
The EITC allows taxpayers to claim their refund under three categories:
Income: you must be an income earner, even if not for the entire year. Income can be wages, salary, tips, self-employed income, union benefits, or military pay. Your earnings cannot surpass the threshold amount, including investment portfolio earnings.
Taxpayer Identification Number: you must have valid Social Security numbers that allow you, your spouse, or your dependent to work in the US. In addition, you must be a citizen with a Social Security Number to claim EIC. However, taxpayers that use ITIN cannot claim the federal EITC.
Qualifying Child: a child must be qualified to claim EITC. You can only claim the child if he/she is your daughter or son. The dependent can also be your sister, brother, half-brother or sister, step-brother or sister, or niece or nephew. The child must be younger than you and your spouse and under 19. But for full-time students, the age is 24—no limitation for disabled kids. The child must live with you for half the year in the US.
Additional criteria for some people to claim the EITC:
You are required to be 19 and above
You cannot file your taxes using the married filing separately method
You can easily claim the EITC by filling it with your returns. But if you have a child claim, you must submit Schedule EIC to the IRS. As a taxpayer you can also seek the help of a tax preparer, such as ROSOVICH & ASSOCIATES, INC.
FOR MORE INFORMATION ON HOW ROSOVICH & ASSOCIATES, INC. CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
THANKS FOR VISITING.
Rosovich & Associates, Inc.