For people with low to moderate incomes, there is a refundable tax credit known as the Earned Income Tax Credit (EITC). Even if they are tax-exempt, it assists working families and individuals in receiving a tax break.
The maximum Earned Income Tax Credit (EITC) that you can claim for the 2021 tax year is determined by the number of eligible children you have.
- No qualifying children: $1,502
- 1 qualifying child: $3,618
- 2 qualifying children: $5,980
- 3 or more qualifying children: $6,728
Here are some additional details about the EITC for 2021:
- Your AGI (adjusted gross income) must be below a certain limit to qualify for the EITC. For 2021, the AGI limits are:
- $15,820 for single filers, heads of household, and qualifying widow(er)s
- $21,710 for married filing jointly (both spouses must have earned income)
- $21,710 for qualifying widow(er)s with a dependent child
- $15,820 for married filing separately and living apart from your spouse for the last 6 months of the year
- You must have earned income from working to claim the EITC. This includes wages, salaries, tips, and self-employment income.
- There are also some investment income limits that you must meet to claim the EITC. For 2021, the investment income limit is $3,650.
Here are some resources that you can use to learn more about the EITC:
- IRS website: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit
- EITC Assistant: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant
- EITC tables: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned-income-tax-credit-eitc-tables
File your taxes and claim the credit if you believe you may be eligible for the Earned Income Tax Credit (EITC). It could save you a lot of money!.
Here are some additional things to keep in mind about the EITC:
- The EITC is a valuable tax credit that can help low-to-moderate income individuals and families get a tax break.
- The EITC is refundable, which means that you can get a refund even if you don’t owe any taxes.
- The EITC is a complex tax credit, so it’s important to make sure you meet all of the eligibility requirements before you claim it.
- The EITC is a great way to save money on your taxes, so be sure to claim it if you qualify.
Here are some additional resources that you may find helpful:
- IRS website: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit
- EITC Assistant: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant
- EITC tables: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned-income-tax-credit-eitc-tables
Please note that the information provided above is for informational purposes only and should not be considered tax advice. Please consult with a tax professional for more information.
Who is an eligible foster child?
A foster child is someone who is placed with you by a court order or an approved placement agency for the purposes of the Earned Income Credit. The child is required to have lived with you for more than half of the year.
You typically qualify if:
- You receive money from your earnings (such as a job, your own company, benefits from union strikes, and some long-term disability benefits).
- In 2023, your total investment income (interest, dividends, rent, royalties, and proceeds from the sale of stocks and other assets) did not exceed $11,000. This increases to $11,600 for 2024.
- You don’t use the Married Filing Separate status if you’re married, or you’re single (though there will be an exception for married couples filing separately in 2021).
- Your Social Security number is shared by you, your spouse, and any children, if applicable.
- You and your partner are not regarded as the other person’s qualifying child.
- Any money you made abroad is not deducted from your return taxes.
- You are a citizen or resident of the United States.
- You are either a parent and have dependents, or you are not a parent and have been a resident of the United States for more than half of the year, and you are at least 25 years old but under 65.
Earned Income Tax Credit (EITC) Explained
FAQ
What is the maximum income to qualify for Earned Income Credit 2021?
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Number of qualifying children
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California maximum income
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Federal EITC (up to)
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None
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$30,000
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$1,502
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1
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$30,000
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$3,618
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2
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$30,000
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$5,980
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3 or more
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$30,000
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$6,728
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What is the cutoff for the EIC?
What are the changes to the Earned Income Credit from 2021 to 2022?
How is EIC calculated?
Who is eligible for a tax credit in 2021?
In 2021, for example, single, heads of household and married filers with one child must have earned at least $10,400 to be eligible for the full credit, according to the IRS. Those earnings can be from wages, salaries, tips or other forms of pay where federal income taxes are withheld, according to the IRS.
How much is EITC tax deductible in 2021?
To claim the EITC, U.S. workers have to file a tax return — even if it isn’t normally required. That so-called “standard deduction” income limit for 2021 is $12,550 for single filers and married filing separately, $18,800 for heads of households and $25,100 for married couples filing jointly.
What are the EITC requirements for 2023?
The basic EITC qualifications for tax year 2023 include: earned income of less than $63,398; investment income of less than $11,000; a valid Social Security number; US citizenship or resident alien status; and no foreign-earned income. How much is the earned income tax credit? The EITC amounts for 2023 range from $600 to $7,430.
When can I use my 2019 or 2021 earned income?
For tax year 2020, the CAA allows taxpayers to use their 2019 earned income if it was higher than their 2020 earned income in calculating the Additional Child Tax Credit (ACTC) as well as the Earned Income Credit (EIC). For 2021, you are allowed to use your 2019 or 2021 earned income based on whichever one gives you the highest credit.