There are only a few tax breaks obtainable for low-income adults who don’t have kids. Fortunately, some important changes have been made to the Earned Revenue Tax Credit score (EITC) final 12 months, making this very important tax profit obtainable to many extra Individuals.
Questioning for those who would possibly qualify to assert this totally refundable tax credit score in 2021? Learn on to search out out!
What’s the Earned Revenue Tax Credit score?
The EITC is a refundable tax credit score for people and households with low to average 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 obtainable to people aged 25-64 with out dependents. The brand new guidelines for tax 12 months 2021 enable extra childless folks to qualify for the credit score.
How a lot is the EITC?
The Earned Revenue Credit score quantity was quickly 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 is determined by your adjusted gross earnings (AGI), tax submitting standing, and what number of youngsters you’ve gotten.
The good factor in regards to the EITC is that it’s totally 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 youngsters you must decide how a lot of the Earned Revenue Credit score you would qualify for in 2021.
| Variety of Kids | 0 | 1 | 2 | 3+ |
| Max Earned Revenue Credit score | $1,502 | $3,618 | $5,980 | $6,728 |
| Max Revenue (single or head of family) | $21,430 | $42,158 | $47,915 | $51,464 |
| Max Revenue (married submitting collectively) | $27,380 | $48,108 | $53,865 | $57,414 |
Observe: 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’ll be able to see from the desk above, probably the most one family could make whereas nonetheless retaining eligibility for the Earned Revenue Credit score is $57,414 — that’s for joint married filers with three or extra youngsters. In the meantime, probably the most you would 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 rely 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 Revenue Tax Credit score.
Extra necessities to assert the EITC
In case you meet the IRS earnings necessities, you simply must ensure you additionally meet the next circumstances to qualify for the Earned Revenue Credit score:
- It is advisable to have lived in the USA 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’s not a most age restrict to assert this tax credit score, however you need to meet the next minimal age necessities relying in your scenario:
- You have to be a minimum of 24 for those who have been a pupil for a minimum of 5 months in 2021
- You have to be a minimum of 18 for those who have been in foster care any time after turning 14 or qualify as a homeless youth
- You have to be a minimum of 19 in all different circumstances
Adjustments to funding earnings and married submitting individually necessities
There are a couple of extra EITC modifications it is best to find out about for 2021 and past. As an example, the IRS elevated its restrict for funding earnings — now you can qualify for the Earned Revenue Credit score in case your funding earnings doesn’t exceed $10,000.
Prior to now, for those who have been married, you needed to file together with your partner to assert the EITC. Beginning in 2021, if you’re married however separate, you should not have to file a joint return to qualify for the Earned Revenue Credit score so long as you lived together with your qualifying little one for greater than half the 12 months. It’s essential to additionally meet one of many following necessities:
- You didn’t stay together with your partner for a minimum of the final six months of 2021; or
- you’re 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 Revenue Credit score for 2021
TaxAct® makes it straightforward to assert the Earned Income Tax Credit 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 options tailor-made to your distinctive tax scenario. Try it out and see for your self!