Earned Income Tax Credit (EITC)

Let’s start by answering the question “What is Earned Income Tax Credit?” also known as EITC we will use the abbreviation through out the rest of the article. The first word in EITC is earned which means you must have worked in the prior year for someone or had a business to receive the credit. The credit is for individuals with low income, the credit starts to phase out the more money you earn not the other way around.

Do You Qualify?

Because you worked does not mean you automatically qualify for these credits, there are guidelines we must follow. The largest shocker for this credit is the age range most people do not know you have to be between the ages of 25 and 65. You can receive this credit even if you do not have any children. You can not receive this credit for your parents. The following individuals will qualify you for this credit:

• Siblings – Sister, Brother, Stepbrother, Stepsister, Half Brother of Half Sister

• Children – Son, Daughter, Stepchild, Foster child, grand child

• Relatives – Niece, nephew

Your qualifying person must be 19 and younger. If they are going to school must be 24 and younger, and younger than you or totally disabled can be any age.

They must live with you for more than half the year and did not provide more than half of their own support. The qualifying person must not file a joint return or if they are filing a joint return it’s to receive the refund for income withheld or estimated tax payments.

Filing Status for EITC

The EITC filing status are: Married filing Jointly (MFJ), Single, Head of Household (HOH), or Widowed.

How Much Money Can You Receive

The most important part is how much is your refund. The EITC may help reduce the amount you owe for federal and State taxes. Yes, California has an earned income tax credit. If your filing status is Single, MFJ, HOH or Widowed your adjusted income must be less than $15,010 no qualifying children, one qualifying child adjusted income must be less than $39,617, two children income less than $45,007, three or more children income must be less than $48,350.

Married filing jointly adjusted income must be less than $20,600 no children, one child adjusted income must be less than $45,207, two children less than $50,597, three or more children adjusted income must be less than $53,950. Your investment income can not be more than $3,450.

The EITC maximum credit for no children is $510 some people might not think this is much money it helps reduce the amount of money you owe to the IRS. This is GREAT considering there was a time you couldn’t receive this credit without children. One child max credit is $3,400, two children $5,616, three children $6,318. The increase from one child to two children is $2,216 while going from two children to three is $702 as you can see the money decrease when you go from two to three children.

Add the credit to the money withheld from your check each year you can receive a hefty refund.

Take the documents below to file

If someone else is helping you with your return take the following documents to them.

• Social Security cards, a Social Security number verification letter, or other U.S. government document verification for all persons you may list on the return.

• Birth dates for all persons you may list on return.

• Copies of last year’s federal and state returns, if you have them.

• All income statements: Forms W-2 and 1099, Social Security, unemployment, and other statements, such as pensions, stocks, interest and any documents showing taxes withheld. If you own or run a business or farm, collect records of all your income.

• All records of expenses, such as tuition, mortgage interest, or real estate taxes. If you own or run a business or farm, collect records of all your expenses.

• All information reporting forms such as the 1095-A, 1095-B or 1095-C.

• Bank routing numbers and account numbers to direct deposit any refund.

• Dependent child care information: name and address of paid caretakers and either their Social Security number or other tax identification number.

Thank you for taking the time to read the EITC information.

Next Post

Offshore Drilling Jobs - How To Get Hired Without Drilling Experience

Sun Jan 2 , 2022
So, you want to work an offshore drilling job. Do you know which companies are involved in offshore oil drilling? Besides the super-big players like Esso, BP, Shell, etc. Did you know that these big boys do not always do their own drilling? Quite often nowadays, they are forced to […]

Latest Post