The Earned Income Tax Credit (EITC) is one of the greatest refundable tax credits available to low-to-moderate-income households from the federal government. Taxpayers with three or more eligible children might get up to $6,728, regardless of whether they owe taxes or not, for the tax year 2021 (filed in 2022).
Because of this year's EITC increase, many more people may be eligible for this vital tax benefit just by submitting a 2021 tax return. People without qualifying children, such as younger employees and older citizens, workers whose 2019 income was higher than their earnings in 2021, and those with investment income of up to $10,000, to mention a few, are eligible.
Several of the previously announced EITC modifications only apply to the tax year 2021. As of 2020, they will be eligible for nearly three times the EITC. For the first time, the credit is accessible to employees under the age of 19 who have earned income of less than $21,430 for single filers and $27,380 for married filers filing jointly. Senior folks are eligible for the EITC in 2021 because there is no higher age restriction.
For taxpayers without qualifying children, the maximum credit is $1,502. In 2020, it was $538. There are particular additional considerations for 18-year-olds who have been in foster care or are homeless, according to Investo Pedia.
Who's Eligible For The Earned Income Tax Credit?
To be eligible for the EITC in the tax year 2021, practically every household must fulfill a few fundamental requirements:
- You have to work and earn less than $57,414 in order to qualify.
- You must have a total investment income of less than $10,000.
- By the deadline for filing your return, including extensions, you must have possessed a valid Social Security number.
- For the entire year, you must have been a US citizen or a resident alien.
- You must not have submitted Form 2555, which deals with earned income from outside the United States.
It's worth noting that military people, religious members, taxpayers, and disabled relatives are all subject to additional requirements. Since its inception in 1975, the EITC has saved more than $60 million to 25 million taxpayers. The typical EITC recipient in 2020 received $2,411 from the credit. Aside from the federal government, 30 states, Washington, DC, Puerto Rico, Guam, and even some municipalities provide their versions of the EITC, as per Go Banking Rates.
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2022 Tax Filing Deadline
Now is the time to file your tax return if you haven't already. The deadline for paying federal taxes in 2022 is April 18, 2022. Filing your tax return is an essential aspect of managing your finances.
Gathering the proper papers and information to file a return takes time for most taxpayers. As a result, now is an excellent time to begin tax planning and payment.
Filing your federal and state income tax forms is straightforward with online tax software. Whether you owe additional taxes or are expecting a refund, the software can help you navigate the procedure and finish and submit your return more efficiently.
If you still need to file and intend to utilize software to do so, have a look at our list of the top tax software to discover the finest software for your needs. If you're on a budget and want to save money, check out our list of the best free tax software, USA Today reported.
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