Earned Income Tax Credit is more like a refund rather than a deduction for people with low to moderate-income. It is one of the most beneficial tax credits for families who have low incomes. No matter how good EITC sounds, not everyone is eligible for it. Here are a few facts about the EITC everyone should know about.
People who file for EITC must register for it as single or married. Married couples can’t file for EITC separately. If they have kids, then they should also be mentioned while filing for the tax return credits. Everyone mentioned in the worksheet must have a verified social security number. Moreover, the person must be between 25 – 65 years of age. Check the earned income credit table for more clarification on this.
The EITC depends on the income of the family and the number of children. A family with a married couple and three children having an income of $55,592 or less can receive up to $6,557. However, the sum varies based on the family members and the income. A single person with an income of $15,570 and no children may receive up to $529.
People often assume that self-employed persons are ineligible to file for EITC. But it’s not the case. According to IRS, all income that is earned is eligible for the credit. So self-employed people are eligible for EITC. However, those who have an investment income of over $3,600 in one year are not eligible for EITC.
Taxpayers who apply for EITC must pay attention to the change in tax laws before filing. Because the laws keep changing, so in case you lose a job, or there is a loss in an annual bonus, or you get married, the tax laws will change accordingly.
If one meets the criteria of availing EITC, it is well and good, and the taxpayer may get an increased refund. But IRS has the right to deny EITC in cases of fraud.