Millions of workers qualify for the Earned Income Tax Credit (EITC) for the first time this year. Verifying your eligibility is crucial to ensure you receive your earned tax credits. Learn about the EITC eligibility requirements and maximize your tax refund.
For more than 40 years, the Earned Income Tax Credit improved millions of workers' lives. You may have extra money waiting for you. If you qualify and claim the credit, it could be as much as $6,935 from the IRS for some workers.
What is the EITC
Who qualifies for the EITC?
EITC Income Limits
According to the IRS, in 2022, 31 million eligible workers and families received about $64 billion in EITC. The average amount of EITC received by families was about $2,411 per household. However, one-fifth of eligible EITC recipients failed to claim the tax credit last year. Those at risk for overlooking the tax credit include Native Americans, grandparents raising a child, adults without children, Veterans, persons with disabilities or who have children with disabilities, and those with earnings below the tax filing requirements.
What is the EITC?
The Earned Income Tax Credit (EITC) is a financial benefit designed to help working adults with low to moderate incomes. The credit benefits those struggling to make ends meet and can be a lifeline for families living paycheck to paycheck. If you qualify, the EITC can be used to reduce the taxes you owe and may increase your Federal tax refund.
Who Qualifies for the EITC?
Eligibility for the EITC depends on several factors, including your filing status, income, and family size. The credit amount gradually reduces and phases out as your income increases.
To qualify for the EITC, you must meet one of the following conditions:
- Have worked and earned income from wages, salaries, or tips where taxes were withheld
- Have income from a job where your employer didn’t withhold tax, such as a delivery driver, online selling of goods, or professional services.
- Money made from self-employment, including operating/owning a business or farm
- Benefits from a union strike
- Certain disability benefits
- Nontaxable combat pay
EITC Income Limits
Income limits for workers in the year 2022 are:
- $53,057 ($59,187 married filing jointly) with three or more qualifying children who have valid SSNs
- $49,399 ($55,229 married filing jointly) with two qualifying children who have valid SSNs
- $43,492 ($49,622 married filing jointly) with one qualifying child who have valid SSNs
- $16,480 ($22,610 married filing jointly) with no qualifying children who have valid SSNs
In addition to the income requirements, your investment income can be at most $10,300 in the tax year 2022. Even if you are not required to file a tax return, you must file one with the IRS to claim the EITC. Filing Foreign Earned Income (Form 2555) disqualifies you from the EITC, and certain rules apply if you are separated from your spouse and not filing a joint tax return.
The EITC is a valuable source of income for many taxpayers. It can help eligible taxpayers offset the cost of raising a family, housing, and other necessities. The EITC reduces poverty and improves the well-being of children in low-income households and has also increased labor force participation, particularly among single mothers. The EITC can also reduce the amount of tax you owe and may even result in a refund if the credit amount exceeds your total tax liability.
If you think you may be eligible for the EITC, the best way to find out is to talk to a tax professional. If you are interested in more information or assistance with tax preparation, click here