What qualifies you for the earned income tax credit?
the Earned Income Tax Credit (EITC) is designed to provide support to low and middle income households. Generally, the credit is greater for lower-income filers, and the amount offered is usually the highest for families with children.
the EITC can be claimed on your tax return at reduce the amount of your tax bill or increase the amount of any refund you may be owed. However, to be eligible for assistance, you must have:
– Worked in the last year
– Earned income less than $57,414
– A valid Social Security number, valid on the due date of your 2021 tax return
– United States citizenship or resident alien status
– Form 2555 not filed regarding foreign earned income
How does the EITC work?
The amount offered to beneficiaries can vary considerably and the amount of your entitlement does not increase for filers who pay more tax, unlike many other tax credits. In fact, low-income filers are most likely to receive the largest payments. This year (2021 tax returns that are filed in 2022), the The earned income tax credit ranges from $1,502 to $6,728.
The amount of your entitlement will be based on your tax status, income and number of children, although filers without children may also be eligible. The highest upper income threshold of $57,414 is reserved for households with three or more children where the filer is a couple filing taxes jointly.
Eligibility is largely based on earned income, which generally includes all wages, salaries, travel and other taxable compensation you receive from your employer. This is different from your adjusted gross incomewhich allows certain deductions.
If you think you are eligible, you should make sure to include the EITC on your tax return and have it submitted before April 18 deadline. This year’s EITC is bolstered by a provision of the US bailout that expanded the credit to provide additional support for low-income Americans during the pandemic.
You also need to determine whether or not you have been eligible for the EITC in the past but have not yet received the money. IRS allows filers to claim up to three years of missed payments if they forgot to claim their rights from previous tax years.