Tax deadline day is fast approaching so it would certainly seem to be an appropriate time to highlight a little tax break that’s out there for those of us who are working and have ‘low to moderate’ income, in the parlance of the IRS. The Earned Income Tax Credit (EITC) allows you to reduce, or even completely eliminate, your federal income taxes if you meet certain criteria.
There are several tax brackets and different levels of credit allowed. This year if you are a worker who’s at least 19 years old, you have no qualifying children, and you’re filing single you’ll qualify for a credit of up to $600 if your income was below $17,640 in 2023. That makes for rather depressing reading as for the tax year 2021 you could earn up to $21,430 and get a credit up to $1502. That meagre income limit does rise to $24,210 if you’re a spouse filing a joint return.
There’s happier reading for those with ‘qualifying’ children; the childless are noticeably being cut adrift. A qualifying child must be related to you, the taxpayer. While that usually means the child is your son or daughter, the child can also be a niece, nephew, foster child, great-grandchild, and even a half-sibling. The child must also be under 19 years of age, or under 24 and a full- time student; and the child has to live with you at least half the year. Your child can be any age if permanently and totally disabled during any part of the year.
If you have three of those kids in the house and you file jointly you can qualify for the EITC if your income is up to $63,398; and the maximum credit is as much as $7,430. For a full list of the facts and figures go here Earned Income and Earned Income Tax Credit (EITC) Tables | Internal Revenue Service (irs.gov)
For more information on EITC and for help with filing you can visit the IRS webpage here Earned Income Tax Credit (EITC) | Internal Revenue Service (irs.gov)