There are only a few tax breaks accessible for low-income adults who don’t have youngsters. Fortunately, some necessary adjustments had been made to the Earned Earnings Tax Credit score (EITC) final yr, making this very important tax profit accessible to many extra People.
Questioning in case you would possibly qualify to assert this absolutely refundable tax credit score in 2021? Learn on to search out out!
What’s the Earned Earnings Tax Credit score?
The EITC is a refundable tax credit score for people and households with low to reasonable incomes. Starting in tax yr 2021, this credit score has expanded to working adults age 19 or older (together with seniors 65 and older), no matter whether or not or not they’ve youngsters.
Beforehand, this tax credit score was accessible to people aged 25-64 with out dependents. The brand new guidelines for tax yr 2021 enable extra childless folks to qualify for the credit score.
How a lot is the EITC?
The Earned Earnings Credit score quantity was briefly expanded for 2021, permitting certified childless taxpayers to assert a credit score of as much as $1,502 on their federal earnings tax returns. In 2022, the utmost credit score will drop to $560 for certified childless taxpayers.
The quantity you obtain will depend on your adjusted gross earnings (AGI), tax submitting standing, and what number of children you’ve.
The good factor concerning the EITC is that it’s absolutely refundable. If the credit score quantity you qualify for is greater than the quantity of tax you owe, you’ll obtain the distinction as a tax refund.
What are the earnings limits for the EITC?
Use your adjusted gross earnings, marital standing, and the variety of children it’s important to decide how a lot of the Earned Earnings Credit score you could possibly qualify for in 2021.
|Variety of Kids||0||1||2||3+|
|Max Earned Earnings Credit score||$1,502||$3,618||$5,980||$6,728|
|Max Earnings (single or head of family)||$21,430||$42,158||$47,915||$51,464|
|Max Earnings (married submitting collectively)||$27,380||$48,108||$53,865||$57,414|
Word: Each your earned earnings (wages, ideas, and web self-employment earnings) and your AGI (your gross earnings minus any changes) should each be beneath the thresholds listed on this desk.
As you’ll be able to see from the desk above, probably the most one family could make whereas nonetheless retaining eligibility for the Earned Earnings Credit score is $57,414 — that’s for joint married filers with three or extra children. In the meantime, probably the most you could possibly earn as a single filer with out youngsters to assert the credit score is $21,430.
I obtained stimulus cash or advance Youngster Tax Credit score funds final yr. Do these depend as earnings for the EITC?
No, any stimulus funds or advance Youngster Tax Credit score funds you obtained final yr aren’t counted for earnings functions when claiming the Earned Earnings Tax Credit score.
Further necessities to assert the EITC
In the event you meet the IRS earnings necessities, you simply must be sure to additionally meet the next circumstances to qualify for the Earned Earnings Credit score:
- You might want to have lived in the US for greater than half of 2021
- You can’t be claimed as a dependent or qualifying little one on another person’s tax return
There may be not a most age restrict to assert this tax credit score, however it’s essential to meet the next minimal age necessities relying in your state of affairs:
- You should be a minimum of 24 in case you had been a pupil for a minimum of 5 months in 2021
- You should be a minimum of 18 in case you had been in foster care any time after turning 14 or qualify as a homeless youth
- You should be a minimum of 19 in all different circumstances
Modifications to funding earnings and married submitting individually necessities
There are just a few extra EITC adjustments it’s best to learn about for 2021 and past. For example, the IRS elevated its restrict for funding earnings — now you can qualify for the Earned Earnings Credit score in case your funding earnings doesn’t exceed $10,000.
Previously, in case you had been married, you needed to file along with your partner to assert the EITC. Beginning in 2021, in case you are married however separate, you would not have to file a joint return to qualify for the Earned Earnings Credit score so long as you lived along with your qualifying little one for greater than half the yr. You will need to additionally meet one of many following necessities:
- You didn’t reside along with your partner for a minimum of the final six months of 2021; or
- you might be legally separated beneath your state’s legal guidelines with both a written separation settlement or a decree of separate upkeep and weren’t dwelling along with your partner on the finish of 2021
Claiming the Earned Earnings Credit score for 2021
TaxAct® makes it simple to assert the Earned Earnings Tax Credit score in your return. Our step-by-step course of guides you thru your federal and state returns at a tempo that’s best for you and provides you useful ideas tailor-made to your distinctive tax state of affairs. Attempt it out and see for your self!