There are only a few tax breaks out there for low-income adults who don’t have kids. Fortunately, some vital modifications have been made to the Earned Earnings Tax Credit score (EITC) final 12 months, making this important tax profit out there to many extra Individuals.
Questioning when 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 12 months 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 kids.
Beforehand, this tax credit score was out there to people aged 25-64 with out dependents. The brand new guidelines for tax 12 months 2021 permit extra childless individuals 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 gotten.
The great factor in regards to 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 a must to decide how a lot of the Earned Earnings Credit score you can 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 below the thresholds listed on this desk.
As you may 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 can earn as a single filer with out kids to assert the credit score is $21,430.
I acquired stimulus cash or advance Little one Tax Credit score funds final 12 months. Do these depend as earnings for the EITC?
No, any stimulus funds or advance Little one Tax Credit score funds you acquired final 12 months will not be counted for earnings functions when claiming the Earned Earnings Tax Credit score.
Further necessities to assert the EITC
In case you meet the IRS earnings necessities, you simply have to be sure you additionally meet the next situations to qualify for the Earned Earnings Credit score:
- It is advisable have lived in the US for greater than half of 2021
- You can’t be claimed as a dependent or qualifying baby on another person’s tax return
There may be not a most age restrict to assert this tax credit score, however you have to meet the next minimal age necessities relying in your state of affairs:
- You should be no less than 24 when you have been a scholar for no less than 5 months in 2021
- You should be no less than 18 when you have been in foster care any time after turning 14 or qualify as a homeless youth
- You should be no less than 19 in all different circumstances
Adjustments to funding earnings and married submitting individually necessities
There are just a few extra EITC modifications it is best to learn about for 2021 and past. As an 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.
Prior to now, when you have been married, you needed to file together 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 together with your qualifying baby for greater than half the 12 months. You should additionally meet one of many following necessities:
- You didn’t dwell together with your partner for no less than the final six months of 2021; or
- you might be legally separated below your state’s legal guidelines with both a written separation settlement or a decree of separate upkeep and weren’t dwelling together with your partner on the finish of 2021
Claiming the Earned Earnings Credit score for 2021
TaxAct® makes it straightforward 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 offers you useful strategies tailor-made to your distinctive tax state of affairs. Attempt it out and see for your self!
