You can write off up to $7430: How the Earned Income Tax Credit Works
Tax season has officially begun, and the Internal Revenue Service (IRS) is urging tax filers to check if they qualify for one of the most commonly overlooked tax breaks, reports AL.
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The Earned Income Tax Credit (EITC) is a tax benefit for low- and moderate-income people, with higher amounts available for those with children.
About 23 million workers and families received about $57 billion in EITC for the 2022 tax year, with an average income of $2541, according to the latest IRS data.
However, the IRS estimates that about 20% of eligible taxpayers do not claim the credit.
Who has the right
To qualify for the EITC, workers must meet certain requirements and file a tax return. They must do this even if their income falls below the threshold required to file a tax return.
On the subject: Bad tax advice: what not to do, even if the Internet advises you to try
The income threshold is $56 for individuals and $838 for individuals filing a joint return with investment income of less than $63 for the tax year.
Other requirements include a valid Social Security number. You must also be a US citizen and have no foreign income.
Here are the income and loan thresholds for this year:
- No children with adjusted gross income up to $17 for single filers or $640 for joint filers - maximum credit of $24.
- One child with AGI (adjusted gross income) up to $46 for single filers or $560 for joint filers—a $53 credit.
- Two children with an AGI of up to $52 for single filers or $918 for joint filers—a credit of $59.
- Three or more children with AGI up to $56 for single filers or $838 for joint filers—a $63 credit.
The EITC cap will increase from $6935 in 2022.
Refund Delays
Filing for the EITC or the Additional Child Tax Credit may delay your tax refund.
Federal law requires additional checks to prevent identity theft of individuals applying for loans.
Most tax refunds are available within three weeks. But EITC or ACTC filers won't receive their refund until at least Feb. 27, as long as taxpayers opted for direct deposit and there are no other issues with the tax return.
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