Tax credits are something that can befuddle people who aren’t familiar with our nation’s tax code.
You know that tax credits exist. You hear people talk about how they got thousands of dollars back because they qualified for this or that credit. But you just don’t know exactly what tax credits are out there and if you qualify for them!
Well, we want to clear up the confusion about one of the most potentially lucrative ones — the Earned Income Tax Credit (EITC).
What exactly is the Earned Income Tax Credit (EITC)?
The IRS has declared January 26, 2018, as the annual #EITCAwarenessDay.
In order to qualify for the EITC, you must have earned income either from working for someone else, being a freelancer or independent contractor or being your own boss and running a business.
Here are some quick hits so you can get up to speed about the EITC…
First things first — find out if you qualify
The EITC is aimed at workers on the low to moderate end of the income scale — defined as those who earned $53,930 or less in 2017.
The IRS has more granular details based on the number of qualifying children you’re claiming:
In addition, your investment income must be $3,450 or less for the year.
If you have questions about your specific situation, use the EITC Assistant on the IRS website to determine your eligibility.
The maximum benefit will go to working families
For working families, the EITC benefit tends to be larger — up to $6,318 if you have three qualifying children.
With two qualifying children, you can get $5,616. Only have one child? You could get $3,400.
But single workers can benefit, too
Have an income below $20,600 and no qualifying children?
The IRS says you may be eligible for a smaller credit of up to $510.
Don’t normally file a return? Consider doing it this year
Certain taxpayers aren’t required to file a tax return. People whose income for the prior year was less than the standard deduction plus one exemption, and who aren’t claimed as a dependent by another taxpayer, don’t have to file a federal tax return.
Yet even if you don’t owe the IRS or aren’t required to file, the EITC could make it worth your while to file!
Depending on your income and your number of dependents, you could be leaving $6,318 on the table if you don’t. Fortunately, filing can be done quickly and easily for free through the IRS Free File program.
The IRS is encouraging lots of different people to apply for the EITC
The IRS has been on a tear putting out news releases to encourage people who might not normally think to file for the EITC to do it this year.
Here on Clark.com, we told you how anyone who lived in an area of the country affected by Hurricanes Harvey, Irma or Maria last year should apply.
You’ll have to wait until late February — at the earliest — to get your refund
People who file and claim the EITC will have to play a waiting game with the IRS. The IRS is required to hold any refund involving the EITC until mid-February to detect fraud and prevent errors.
In fact, the IRS has repeatedly said that February 27 is the earliest any refund will be available to you if you claim the EITC. And that’s assuming there are no errors or other problems with your return and you choose to get your refund via direct deposit.