Published: August 18, 2022
In March each year, people begin thinking that Tax Day is just around the corner and its time to file a return. If you’re 65 or older and have a low-to-moderate income, you could be eligible for the Earned Income Tax Credit (EITC). This tax credit can help you pay your bills and decrease your tax bill. Depending on your earnings you may be eligible for the EITC. For example, if you earn up to $27,380 per year without children you qualify. Or if you earn $57,414 per year while caring for children, you qualify. So, tax payers meeting the qualifications should verify their eligibility and by doing so might save more than $1,500?
Many eligible people lose out on the EITC tax credit because they do not file their taxes. They do not file taxes because their income falls below the level that requires them to file taxes. But they still pay taxes because they are withheld and deserve to receive the credit in the form of a refund, according to the IRS. Others are under the impression that getting the EITC may affect their eligibility for other government benefits. This is not the case. For example, most refunds earned through the EITC are not considered income. Government benefit programs not impacted by EITC are Medicaid, Supplemental Security Income (SSI), and Supplemental Nutritional Assistance Program (SNAP.) Also included on the list are Section 8 housing and other programs with maximum income restrictions.
The Earned Income Tax Credit (EITC) was established in 1975. It was created to operate as an anti-poverty program, assisting millions of American families each year. Changes to the American Rescue Plan (ARP) will help even more Americans. This change, which includes the EITC, will make more individuals eligible for significant new tax advantages this year. For the first time, the maximum credit for taxpayers has roughly tripled. And it now applies to both younger and older taxpayers. The Earned Income Tax Credit is a valuable benefit that only a small percentage of the population who qualify. And most people who qualify do not know about the credit. Every year, at least 20 percent of eligible workers miss out on this benefit.
The EITC is a work subsidy that motivates people to work and helps them get out of poverty. When it comes to getting out of poverty, refundable tax credits like the federal EITC are second only to Social Security. The credit motivates people to work since the benefit grows in proportion to the wages for low-wage workers. A single worker with one child receives a $34 credit for every additional $100 earned. This credit is up to a maximum of $10,370. After that, the credit-level plateaus, then progressively declines to zero. A single worker between 25- and 64-years-old with no children will receive around $8 for every $100. The max benefit is $6,920, with no benefits after earning $15,570.
Before you find out if you qualify for the next tax year, keep in mind that this is a tax credit, not a loan. Also, social security and pension payments aren’t considered income for this credit. To be eligible for the Earned Income Tax Credit, or EITC, you must meet the following criteria:
The amount of EITC credit is based on several qualifying conditions. For example, if you have children, dependents, are disabled, or fulfill other conditions, this can affect the amount you qualify for. If you’re unclear if you qualify, review the Internal Revenue Service (IRS) website or call them. The IRS has created an EITC Assistant, which is a tool that evaluates your eligibility. You’ll need the following items to use the EITC Assistant:
VITA sites can be found in a variety of places in your community. Some sites are at neighborhood centers, libraries, schools, and retail malls. To find a VITA facility near you, use the VITA Locator Tool on the internet or call 800-906-9887. GetYourRefund.org, a nonprofit program created by Code for America, can help you learn how to apply for the EITC. It includes free tools and IRS-certified volunteers who can assist you if this is your first-time filing taxes. Also, if you need assistance filling out the form to claim your EITC credit, they can help.
Yes, your refund will be delayed. The IRS warns that claiming the EITC might cause a delay in your tax refund. Regrettably, if you file your return very early, the IRS is unable to release EITC refunds before the middle of February. This is because of a legal requirement. Do the following if you want to make sure you get your refund before March 1st:
When submitting your tax return, prevent making typical mistakes, according to the IRS. If you want to check on the status of your return, go to the IRS’ Where’s My Refund website. The website is the best place to go, but you may also use the IRS2Go smartphone app.
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