The earned income tax credit (EITC) is a refundable tax credit that assists low-income Americans by reducing the amount of tax owed on a dollar-for-dollar basis. If taxpayers’ tax credit surpasses their tax liability for the year, they may be eligible to claim a refund.
How much refund would you get?
Millions of low-income Americans may be qualified for a one-time tax rebate worth thousands of dollars this tax season. The federal Earned Income Tax Credit, which is intended for people in low-wage jobs, is being tripled for a group of workers who don’t typically gain much from it: childless adults. According to Gwen Garren, director of refundable credits program management, the credit is now accessible to both younger workers and senior citizens for the first time, CBS News posted.
A deduction reduces your taxable income, which lowers your taxes. On the other hand, a tax credit reduces the amount of tax you owe on a dollar-for-dollar basis. If you owe $700 in taxes and receive a $500 tax credit, your tax liability will be reduced to $200.
The EITC is a refundable tax credit, which means you will receive the total amount even if the credit exceeds the amount of tax you owe for the year. For example, if you owed no income tax and received a $500 EITC, you’d get a $500 refund, according to AARP.
Refund might be expected March 1
Taxpayers who asserted the EITC or ACTC are probably still waiting for reimbursement. Waiting for a refund can be aggravating because these tax credits provide a much-needed financial boost to many families.
Taxpayers who meet the requirements may receive their refund a few days sooner. Please keep in mind that it may take a few extra days for your bank to accept your refund payment – so don’t be concerned if you don’t see it on March 1, US Today wrote.