The EITC or Earned Income Tax Credit is a tax credit that can help you improve your income and build a better future for your family.
The Earned Income Tax Credit, also known as the EITC, is a refundable tax credit that is specially designed for low- and moderate-income workers. You can claim it easily when you file your annual tax return with the Internal Revenue Service (IRS).
This year you can claim up to $6,728 depending on your taxpayer status, income levels and number of dependent children. Also, if you didn’t claim the EITC for the past 3 years, but were eligible, you can still claim the credit retroactively to get a refund.
Even if you have already claimed this credit in previous years, you should know that the American Bailout Act introduced some changes to the requirements around the EITC. At Futuro Tax we tell you everything you need to know about this tax credit to continue building a better future for you and yours.
What is the Earned Income Tax Credit?
For tax year 2021 (the tax return you file in 2022), this credit ranges from $1,502 to $6,728 depending on your filing status and how many children you have. However, it is not necessary to have children to be able to claim it.
You can also use your 2019 income instead of your 2021 income to calculate your EITC amount, but only if your 2019 income is higher than your current income.
This tax credit not only reduces the amount of taxes you owe, but depending on the case, it could mean a considerable refund. In some cases, even more than what you actually paid in taxes.
Income limit to claim the EITC
Below we detail the maximum amounts you can claim with the Earned Income Tax Credit.
Childless
Maximum claimable amount: $1,502
For individual taxpayers, a maximum AGI of $21,430 is considered, and for married couples up to $27,380.
1 child
Maximum claimable amount: $3,618
For individual taxpayers, a maximum AGI of $42,158 is considered, and for married couples up to $48,108.
2 children
Maximum claimable amount: $5,980
For individual taxpayers, a maximum AGI of $47,915 is considered, and for married couples up to $53,865.
3 or more children
Maximum claimable amount: $6,728
For individual taxpayers, a maximum AGI of $51,464 is considered, and for married couples up to $57,414.
Other eligibility criteria to consider
In addition to staying below the income thresholds explained above, there are other requirements to be considered eligible. Among other factors that the IRS will look at when evaluating whether you qualify for this tax credit, you must have at least $1 in employment income (pensions and unemployment benefits do not count). Also, your annual investment income must not exceed $10,000.
The claimed child can be your son, daughter, adopted child, or stepchild as well as a grandchild. A brother, sister, half-siblings, step-siblings, or nephews may also be claimed, as long as the person claimed is under 19 years of age at the end of the tax year.
In case you are a full-time student, eligibility extends to age 24. For people with permanent disabilities, there is no age limit.
Do you need help claiming a family member to apply for your EITC? Not sure if you qualify for this and other tax credits? Don’t worry, at Futuro Tax we help you manage your taxes in the simplest and most efficient way with our state-of-the-art tax preparation tools available completely in Spanish.
In addition, we have a team of professional preparers ready to help you solve all your doubts and problems in the best way. Don’t hesitate anymore!
In the meantime, we invite you to continue reading our blog to keep up to date with all the news that affects your taxes.
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