What’s everyone’s main goal during tax time? To save as much money as possible.
There are tax credits and deductions that can help you achieve this goal. One of the biggest ones is the Earned Income Tax Credit, or EITC.
Let’s take a closer look at what it is and see if you’re eligible.
The Purpose of the Earned Income Tax Credit
The EITC is primarily intended for couples and individuals who earned a low income while having children to support.
Does this mean you have to have children to be eligible? Not necessarily, and we’ll get into that in a bit.
Unlike a deduction that reduces how much of your income can be taxed, a credit directly reduces how much taxes you owe.
In short, the EITC is even better than a deduction since it can reduce your tax liability and increase the size of your refund.
Qualifications for the Earned Income Tax Credit
As mentioned, the EITC was primarily intended for those who have kids to support on a small income. To get more specific, however, here are the main eligibility requirements for the credit:
- You must have earned some form of income.
- You must be between 25 and 65 years old.
- You must have been a U.S. citizen or resident alien for the entire tax year.
- You must have a Social Security number.
As you can see, there’s no mention of children in that list. That’s because you can still be eligible for the EITC if you don’t have children but earned a meager income.
If your adjusted gross income (AGI) is less than $15,570 as a single filer or $21,370 as a married couple filing jointly, you may be eligible.
Income limits for parents depend on the number of children involved. The more children you have, the higher the income limit.
All children must meet the requirements for age, residency, and Social Security number too.
Earned Income Tax Credit Benefits for 2019
If you’re curious as to how much the EITC can reduce how much taxes you owe, here are the 2019 numbers:
- No children, yet meet the AGI threshold – Up to $529.
- One qualifying child – Up to $3,526.
- Two qualifying children – Up to $5,828.
- Three or more qualifying children – Up to $6,557.
Getting the Earned Income Tax Credit
If you feel like you’ll be eligible for the EITC, you’ll need to file a tax return to receive it. This is true even if you aren’t required to file or don’t owe any taxes.
You can use the IRS’ Free File tool to complete your return online at no cost. If it seems too complicated, you can also hire a tax professional to do the job for you.
While we’re already past that point this year, know that in the future, the IRS usually cannot issue refunds before the middle of February if you claimed the EITC.