When you file your taxes, the hope is often that you can get the most possible money back. And the Earned Income Tax Credit (EITC) may be able to help.
Are You Eligible for This $6,728 Tax Credit?
The Internal Revenue Service (IRS) declared January 29, 2021, as its annual Earned Income Tax Credit Awareness Day. But how much do you know about this valuable tax credit?
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.
Who Qualifies for This Tax Credit?
The EITC is aimed at workers on the low-to-moderate end of the income scale — defined as those who earned $57,414 or less in 2020.
The IRS website offers more granular details based on the number of qualifying children you’re claiming.
Note that your investment income must be $3,650 or less for the year to qualify for this credit.
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 $6,728 if you have three qualifying children.
Here’s the maximum amount of credit you can claim for the 2021 tax season:
- 1 qualifying child: $3,618
- 2 qualifying children: $5,980
- 3 or more qualifying children: $6,728
See the IRS Qualifying Child Rules here or see Publication 596.
But Single Workers Can Benefit, Too
Have an income below $15,980 and no qualifying children?
The IRS says you may be eligible for a smaller credit of up to $543.
Don’t Normally File a Return? Consider Doing It This Year
Certain taxpayers aren’t required to file a 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 do the paperwork.
Depending on your income and your number of dependents, you could be leaving up to $6,728 on the table if you don’t. Fortunately, filing can be done quickly and easily for free through the IRS Free File program.
Claiming the EITC Means You’ll Have To Wait To Get Your Refund
People who file and claim the EITC will have to play a waiting game with the IRS.
“If you claimed the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC), your refund may be delayed. You can expect to get your refund as soon as the first week of March.”
The March deadline is optimistic even if you filed online, opted for direct deposit and the IRS found no issues with your return. So your wait could potentially be longer depending on how you chose to file.