The Earned Income Tax Credit is one of the greatest tax credits available each year, yet it is sometimes ignored when it comes to filing taxes. The credit is meant to give financial relief to low-to-moderate-income families and allows for bigger tax returns as the number of family members grows.
According to the IRS, one out of every five eligible taxpayers does not claim the credit, resulting in them losing money each year. Only individuals who file a tax return each year are eligible for the EITC. Per Go Banking Rates, the rules have changed this year, and the Earned Income Tax Credit is now worth up to $6,728 for a household with three or more children — or up to $1,502 for taxpayers without a qualifying child, according to the IRS.
How to qualify for Earned Income Tax Credit?
Whether or whether you owe taxes determines your exact amount. You will get the difference if the amount of Earned Income Tax Credit you are due is larger than your tax bill. You must have worked and earned less than $51,464 in order to claim the EITC on your 2021 tax return.
If you’re married and filing jointly, the amount rises to $57,414. Your investment must have been less than $10,000 in 2021 and you must not have filed a foreign earned income statement. By the due date of your 2021 tax return, you must have a valid Social Security number and have been a US citizen or resident alien for the whole year.
Everyone you claim on your taxes must have a valid Social Security number (SSN) to be eligible for the EITC. According to Marca, the SSN must meet the following criteria to be valid:
- Valid for employment
- Issued before the due date of the tax return you plan to claim (including extensions)
Social Security cards that say “Valid for employment with DHS authorization” are accepted by the IRS. You can utilize one of the following statuses to qualify for the EITC:
- Married filing jointly
- Head of household
- Qualifying widow or widower
- Married filing separate
However, if you are married, not filing a joint return, and have a qualified child who resided with you for more than half of 2021, you can claim the EIC. If you spent the last six months of 2021 separated from your spouse.
If you were officially separated from your spouse at the end of 2021, according to your state’s laws, through a documented separation agreement or a decree of separate maintenance, and you didn’t reside in the same home as them. If you’re not married and pay more than half of the costs of maintaining your house where you reside with your qualifying child, you can claim the Head of Household filing status.