Are You Missing Out on the Earned Income Tax Credit (EITC)?

By Peoples Tax | February 9, 2018
Posted in: Individual Tax

The Earned Income Tax Credit (EITC) is one that taxpayers who qualify should not overlook this tax season. And, according to the IRS, millions of taxpayers qualify and may not even know it. Whether you earned income working for someone, working for yourself as a business owner, or a farm, you may qualify if you meet these basic rules.

Who Qualifies? 

The EITC applies to the following taxpayers with qualifying children:

  • U.S. citizens or full-year resident aliens
  • Those having a Social Security number valid for employment
  • Can’t be the qualifying child of another person
  • Those who earned $53,930 or less during 2017
  • Have investment income less than $3,450
  • Can’t file as married filing separate
  • People with disabilities
  • Parents of children with disabilities
  • Victims of hurricanes Harvey, Irma, or Maria
  • Families with 1 to 3 qualifying children

The EITC applies to individuals without a qualifying child if:

  • They resided in the United States for more than half of the year
  • Have a Social Security number valid for employment
  • Aren’t filing married filing separate
  • Can’t be claimed as a dependent or qualifying child by another taxpayer
  • Are at least 25 years old and under 65 years old at the end of the tax year
  • Earned income and adjusted gross income (AGI) don’t exceed
    • $15,010 if single or head of household
    • $20,600 if married filing join
  • Investment income is less than $3,450

Whether or not you owe taxes – even if you aren’t required to file, EITC reduces the amount of tax you owe and may give you a refund.  You must file a tax return to claim the Earned Income Tax Credit.

How Is Disabled Defined?

According to the IRS, totally and permanently disabled is defined in the following ways:

  • The person cannot engage in any substantial gainful activity because of a physical or mental condition.
  • A doctor determines the condition has lasted or the doctor expects it to last continuously for at least a year or lead to death.

Don’t Miss Out!

According to the IRS, four out of five persons eligible for EITC apply for and get the credit.

  • Eligible families with three or more qualifying children can  get a maximum credit of up to $6,318.
  • Individuals  without a qualifying child, can get get up to $510.

“Unlike most deductions and credits, the EITC is refundable. This means those eligible may get a refund from the IRS even if they owe no tax. In 2017, almost 27 million taxpayers received over $65 billion in EITC. The average amount of EITC received was $2,445.” – IRS website

Refund Delays

If you do qualify, and end up claiming the EITC, don’t expect your refund right away. The IRS plans to delay refunds for tax returns claiming the EITC or the Additional Child Tax Credit. This is so they can safeguard against identity theft and tax fraud. The IRS will start issuing refunds for those returns February 27th.

Have questions? Give us a call. It’s important that you file early so that you get your refund as early as possible. Schedule your appointment today.

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