Have you ever heard of the Earned Income Tax Credit (EITC)? If you haven’t, you probably missed out on $6,935 this past tax season. Every year, nearly 1 in 5 eligible workers fail to claim the EITC due to a lack of awareness. To help remedy the issue, the IRS is hosting its 17th annual EITC Awareness Day on January 27, 2023. The goal is to inform workers about the credit and educate them on how to claim it.
What is the Earned Income Tax Credit?
The EITC is a refundable credit specially designed to help low to moderate-income workers. As with all credits, the EITC can reduce your tax liability but it also offers an additional perk. Since it’s refundable, you can receive a portion back as a refund once your tax obligation has been fulfilled. This is why you still need to file a tax return even if you didn’t earn much money. The best way to do your taxes is with ezTaxReturn.com. It’s fast, easy and you’ll get the biggest possible refund guaranteed.
According to the IRS, 31 million workers and families were able to claim the EITC last year with the average amount being $2,043. While Uncle Sam doesn’t just give the money away, meeting the qualifications is fairly easy. Aside from having earned income, all it takes is:
- Having a valid Social Security Number
- Using any filing status except “married filing separately”
- Being aged 25-64 by the end of the year or having qualifying children
What are the income limits?
The maximum income limit varies based on your filing status and the number of qualifying children being claimed. Don’t worry, you may still be eligible even if you don’t have any kids. The income limits are as follows:
Single, head of household or widowed
- $53,057 when claiming three or more qualifying children
- $49,399 when claiming two qualifying children
- $43,492 when claiming one qualifying child
- $16,480 when not claiming a qualifying child
Married filing jointly
- $59,187 when claiming three or more qualifying children
- $55,529 when claiming two qualifying children
- $49,622 when claiming one qualifying child
- $22,610 when not claiming a qualifying child
Additionally, your investment income must be less than $10,300 for the entire year.
How much money is the credit worth?
For tax year 2022, the credit is potentially worth:
- $6,935 with three or more qualifying children
- $6,164 with two qualifying children
- $3,733 with one qualifying child
- $560 with no qualifying children
Please note, if you claim the EITC the IRS will not issue your refund before mid-February. This applies to your entire refund, not just the portion based on the credit. Although you may hate the extra waiting time, this is being done to minimize the risk of fraudulent returns.