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Are you eligible for the Earned Income Tax Credit (EITC) on your 2021 Return?

You may be eligible for up to $6,728 in Earned Income Tax Credit (EITC)
– even if you don’t owe taxes.

The EITC is a refundable federal income tax credit for low- and moderate-income working individuals and families. A tax credit is a dollar-for-dollar reduction of taxes owed. Since it is a refundable credit, when the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing, or most Temporary Assistance for Needy Families (TANF) payments.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be required to file a tax return.

 

The American Rescue Plan Act of 2021 made several changes to the Earned Income Tax Credit.

Some of these changes are temporary for the 2021 tax year and others are permanent.
  • For 2021 only, more childless workers and couples can qualify for the Earned Income Tax Credit (EITC). The maximum credit is nearly tripled for these taxpayers and is made available to both younger workers and senior citizens. The age limit for “childless EITC,” which had been 25 to 64, is now lowered to 19 (age 24 for specified students) with no upper age limit. Qualified former foster youth or a qualified homeless youth may now qualify at age 18.
  • In 2021, the maximum EITC for those with no dependents is $1,502, up from $538 in 2020 and is available to filers with an AGI below $27,380 in 2021.
  • Another change is available to both childless workers and families with dependents. For 2021, it allows them to choose to figure the EITC using their 2019 earned income as long as it was higher than their 2021 earned income. In some instances, this option will give them a larger credit.
  • The cap on investment income has been raised for purposes of qualifying for the EIC. Beginning in 2021, an individual can now claim the EIC with up to $10,000 of investment income (which will be indexed for inflation in future years). Before this change, individuals were prevented from claiming the EIC if they had investment income over $3,650.

 

Are You Eligible?

To be eligible for the Earned Income Tax Credit (EITC) you must:

  • Have earned income from employment, self-employment or another source.
  • Have a valid Social Security Number.
  • Be a U.S. citizen or resident alien for the past year. If you’re a nonresident alien, you must be married to a U.S. citizen or legal resident and filing a joint tax return.
  • Have no more than $10,000 in investment income.
  • File a joint tax return if married.
  • Live in the U.S. for more than half of the year, if you aren’t claiming any qualifying children.
  • Be 19 with no upper age limit, if you aren’t claiming any qualifying children (if you are claiming qualifying children, you can be any age). Qualified former foster youth or a qualified homeless youth may now qualify at age 18.

EITC INCOME GUIDELINES

SINGLE, HEAD
OF HOUSEHOLD,
WIDOWED
Earned Income and
Adjusted Gross Income
Must Be Less Than:
MAXIMUM
CREDIT
No Qualifying Children $21,430 $1,502
One  Child $41,158 $3,618
Two Children $47,915 $5,980
Three or More Children $51,464 $6,728
MARRIED,
FILING JOINTLY
Earned Income and
Adjusted Gross Income
Must Be Less Than:
MAXIMUM
CREDIT
No Qualifying Children $21,380 $1,502
One  Child $48,108 $3,618
Two Children $53,865 $5,980
Three or More Children $57,414 $6,728

Have more questions about the EITC? Follow this LINK for a more comprehensive overview of how you may benefit from the changes to this year’s Earned Income Tax Credit.

 

Please note that the VITA volunteer who prepares your return has been trained to calculate any Earned Income Tax Credit you may be entitled to. Please make sure to include the information required with your other tax documents when you come to your appointment.

 

Other Credits You May Qualify For: If you qualify for the EITC, you may also qualify for other tax credits. Follow these links for more information and be sure to include the necessary documents with your tax-related documents (described in the “What to Bring” section of the Intake Packet) you drop off at the preparation site.

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