Earned Income Tax Credit (EITC)

Earned Income Tax Credit (EITC)

Let’s start by answering the question, “What is the Earned Income Tax Credit?” also known as the EITC, we’ll use the acronym for the rest of the article. The first word in the EITC is earned, meaning you must have worked for someone or owned a business in the previous year to get the credit. The loan is for low income earners, the loan starts to gradually decrease the more money you earn, not the other way around.

are you eligible?
Just because you’ve worked doesn’t mean you automatically qualify for these credits, there are guidelines we need to follow. The biggest shock about this loan is the age range that most people don’t know you have to be between 25 and 65 years old. You can get this loan even if you don’t have children. You cannot get this credit for your parents. The following individuals will qualify for this credit:

• Siblings – sister, brother, half-brother, half-sister, half-brother of half-sister
• Children – Son, Daughter, Stepchild, Stepchild, Grandchild
• Relatives – Niece, nephew

Your Qualifying Person must be 19 years of age or younger. If they are in school, they must be 24 or younger, and younger than you or totally disabled can be any age.

They must live with you for more than half the year and have not provided more than half of their own support. The qualified individual must not file a joint return or, if filing a joint return, must receive the refund of withheld income or estimated tax payments.

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

How much money you can get
The most important part is how much you get refunded. The EITC can help reduce the amount you owe in 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 with no eligible children, one eligible child adjusted income must be less than $39,617, income for two children under $45,007, income for three or more children must be less than $48,350.

Married filing joint adjusted income must be less than $20,600 with no children, adjusted income for one child must be less than $45,207, two children under $50,597, adjusted income for three or more children must be less than $53,950. Your investment income cannot be more than $3,450.

The maximum EITC credit for not having children is $510, some people may not think this is a lot of money, it helps reduce the amount you owe the IRS. This is AWESOME considering there was a time when you couldn’t get this credit without kids. The maximum credit for one child is $3400, for two children $5616, for three children $6318. 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 goes down when you go from two to three children.

Add the credit to the money deducted from your check each year, and you can get a hefty refund.

Get the documents below to back them up

If someone else is helping you with your return, bring them the following documents.

• Social Security cards, Social Security Number verification letter, or other US government document verification for any persons you may name on the return.
• Dates of birth for any persons you may list on the return.
• Copies of last year’s federal and state tax returns, if you have them.
• All income statements: W-2 and 1099 forms, Social Security, unemployment and other statements such as pensions, stocks, interest and any documents showing taxes withheld. If you own or operate a business or farm, keep records of all your income.
• Any records of expenses, such as tuition, mortgage interest or real estate taxes. If you own or operate a business or farm, keep records of all your expenses.
• Any information reporting forms such as 1095-A, 1095-B, or 1095-C.
• Bank routing numbers and direct deposit account numbers for each refund.
• Dependent Child Care Information: name and address of paid caregivers and their social security number or other tax identification number.

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

#Earned #Income #Tax #Credit #EITC

Leave a Comment

Your email address will not be published. Required fields are marked *