The beginning of tax season on January 27 marked the start of filing for tax returns, with a deadline set for April 15.
This is the perfect time for individuals with low or moderate incomes to take advantage of the Earned Income Tax Credit (EITC), a powerful tax credit that could result in thousands of dollars in savings or a refund.
Many taxpayers miss out on this opportunity, but knowing the details can make a significant difference.
What Is the EITC?
The Earned Income Tax Credit (EITC) is a federal initiative designed to help individuals and families with low-to-middle incomes by reducing their tax liability.
For many, this credit leads to a larger refund, making it an essential financial benefit. Unfortunately, the IRS reports that about 20% of eligible taxpayers miss out on claiming this valuable credit.
This credit works by reducing the tax liability on a dollar-for-dollar basis. If the credit exceeds the taxpayer’s liability, the difference may be refunded.
Therefore, if taxes were withheld from your paycheck throughout the year, you could receive a refund of that amount.
How Much Is the EITC Worth?
For tax year 2024, the maximum amount of EITC available is $7,830, which is only available to those with qualifying children. However, for 2023, the IRS reported that the average credit received was $2,743.
Here’s a breakdown of how the EITC value differs for taxpayers with and without children:
| Number of Children | Single Filer Income Limit | Married, Filing Jointly Income Limit |
|---|---|---|
| No children | $18,591 | $25,511 |
| 1 child | $49,084 | $56,004 |
| 2 children | $55,768 | $62,688 |
| 3 or more children | $59,899 | $66,819 |
Who Is Eligible for the EITC?
To qualify for the EITC, taxpayers need to meet certain requirements, including:
- Having less than $11,600 in investment income.
- Earning income within specific limits, which vary based on the number of children and whether you are filing as single or married.
- Being a U.S. citizen or resident alien for the entire year.
- Filing a tax return, even if your income typically doesn’t require it.
- Possessing a valid Social Security number (SSN) for themselves, their spouse (if filing jointly), and each qualifying dependent.
Additionally, eligibility also requires:
- Not claiming any foreign income.
Steps to Claim the EITC
To claim the EITC, taxpayers must file Form 1040 or 1040-SR (for seniors). If claiming for a qualifying child, it is necessary to also submit Schedule EIC. Any amount owed through the credit will be included in the tax refund.
If you were eligible in previous years but did not claim the EITC, you can still file and claim your refund. You have up to three years to submit a claim for the previous tax years:
- 2023: File by April 18, 2027.
- 2022: File by April 18, 2026.
- 2021: File by April 18, 2025.
If you filed a return but missed claiming the credit, you can amend your return using Form 1040-X.
The Earned Income Tax Credit (EITC) is a beneficial federal program designed to support individuals and families with lower to moderate incomes. With a potential refund reaching up to $7,830, it can be a significant financial benefit for those who qualify.
Make sure to review the eligibility criteria, check your income limits, and file your tax return on time to claim your credit. If you missed it in past years, it’s not too late to claim your refund. Don’t leave money on the table – take advantage of this valuable opportunity.
FAQs
What is the maximum amount of EITC for 2024?
The maximum amount is $7,830, but only those with qualifying children can receive this full amount.
How do I know if I qualify for the EITC?
You must meet the income limits and other requirements, including having a valid SSN and not having foreign income. Check the table above for income thresholds based on your filing status and number of children.
Can I claim EITC if I don’t have children?
Yes, you can still qualify for the EITC if you meet the income requirements. However, the amount of the credit will be significantly lower for taxpayers without children.