It’s Earned Income Tax Credit Awareness Day
Have you checked in with your financial professional to determine whether you qualify?
Just as the cold, short days of winter lean toward monotony, the mundane becomes celebratory with the arrival of Earned Income Tax Credit (EITC) Awareness Day.
“The EITC is a vital tax credit that helps millions of hard-working families around the nation,” said IRS Commissioner Chuck Rettig in a lead-up to last year’s celebration. “It’s critical that people review the credit to see if they qualify. Increasing awareness about the EITC is important, and the IRS is proud to support the ongoing efforts by partnergroups across the country for sharing this critical information with taxpayers.”
Since its beginning in 1975, the EITC was designed to provide refundable income tax credit to low- and moderate-income workers. It is available even if taxpayers owe no tax, assisting them by offsetting the impact of Social Security taxes while providing them with an incentive to work.
For those who qualify, the credit can be substantial. In 2019, 25 million taxpayers received an average $2,504 in EITC, for a collective $61 billion. Last year, the maximum EITC for those without qualifying children was $538; for those with three or more qualifying children, the credit was $6,660.
To qualify for the EITC, you must have earned income and adjusted gross income within certain limits and meet other rules. The total amount is a reflection of your marital status and the number of children you have, if any.
To find current year income and adjusted gross income limits and maximum credit allowances, visit the IRS website.
To obtain the EITC, you must file a tax return (it will not be distributed if you fail to file a return) and claim the credit, either by filing for free on IRS.gov, working with a tax professional, or seeking free tax preparation assistance (visit the IRS search tool to find the nearest location).
The rules can be complex and they often change for filing for the EITC. If you are uncertain of how to proceed, consult a financial professional for assistance.
Thanks for checking out the blog. Happy EITC Day!
Gregory Armstrong, CFP®