Last week, the IRS updated its FAQs to answer questions on the Earned Income Tax Credit for the 2021 tax year. The new EITC FAQ page looks to provide information to eligible taxpayers on how to properly claim the credit when preparing and filing their 2021 tax returns.
EITC Description
The Earned Income Tax Credit is set up to help low- to moderate-income workers and families get a tax break. The credit can be used to reduce the taxes you owe, and also is refundable! The credit looks to help low- to moderate-income workers with qualifying children and has some basic and special qualifying rules, as follows. To qualify for the EITC, you must:
Basic Qualifying Rules:
- Have worked and earned income under $57,414
- Have investment income below $10,000 in the tax year 2021
- Have a valid Social Security number by the due date of your 2021 return (including extensions)
- Be a U.S. citizen or a resident alien all year
- Not file Form 2555 (related to foreign earned income)
Special Qualifying Rules:
- Military members
- Clergy members
- Taxpayers and their relatives with disabilities
If you are still unsure if you qualify for the EITC, you can also use the IRS’s qualification assistant.
Wrap Up / Overview
The new FAQs spell out what the EITC is, how it was expanded for the 2021 tax year, who is eligible, and how to claim it. This is more important this year because more workers without qualifying children will be eligible as the credit has almost tripled; additionally, for the first time there is no age cap and it will be available to younger workers. The maximum EITC amount for filers without qualifying children is now $1,502. This credit again is fully refundable and should be taken advantage of by those who qualify for it.
Need some assistance claiming the EITC? Feel free to give us a call at 516-541-6549. And don’t forget to visit our website for more news updates!