The Earned Income Tax Credit (EITC) is a crucial tax credit that assists millions of diligent individuals annually. Unfortunately, each year, many people miss out on the benefits of this credit due to a lack of awareness or not realizing their eligibility.
Historically, 1 in 5 eligible Americans doesn’t claim the credit, which is why the Internal Revenue Service (IRS) holds an EITC Awareness Day each year.
The pandemic enhancements to the EITC, which increased its eligibility, have now expired for the 2022 tax year. This means that millions of Americans will either become unable to claim it or will receive a smaller amount. This could increase the chance that many Americans who are still eligible for the EITC will not claim it this year.
Last year, the American Rescue Act expanded the EITC, allowing 18-24-year-olds to qualify and removing the age limit cap. It also tripled the credit amount for workers without qualifying children and made the credit fully refundable. The changes benefited more than 17 million people.
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Who Qualifies for the Earned Income Tax Credit (EITC)?
Low- to moderate-income individuals with eligible children may be able to receive the Earned Income Tax Credit (EITC) if they meet specific eligibility criteria. Individuals who do not have children can still potentially receive the EITC.
Information on how to claim the EITC without a qualifying child is available.
This year, you must be 25-64 years old to qualify for the EITC and the maximum EITC for single filers without children is $560, compared to last year’s maximum pandemic-era credit of $1,500. To be eligible for the EITC, you must have earned income, such as wages, salary, tips, self-employment, and work from side hustles or gig work. Non-taxable combat pay received while in the military is also considered income.
Unemployment benefits, alimony, child support, social security, pensions, or annuities are not considered earned income. If you are unsure if you qualify for the EITC, you can use the IRS EITC Assistant tool.
The IRS urges people to carefully review this important credit, as a major life change in the past year may make you eligible for the first time. If you are a member of the armed forces, disabled, living in a rural area, a grandparent raising a grandchild, disabled, or Native American, you may be eligible for this credit. Don’t miss out on this valuable tax break that can help you financially.
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