Earned Income Tax Credit: Do You Qualify For It?

The IRS gives an additional tax credit to low-income taxpayers of the United States in the form of the Earned Income Tax Credit or EITC. The lower your income, the higher EITC you get from the IRS every tax year. For the tax year 2021 only, you can claim a minimum of $1,502 as EITC which can go up to $6,728 depending on your filing status, the number of children, and more. The qualification guidelines are simple, yet filled with details that you need to keep in mind to claim the EITC. The IRS, after all, is quite sensitive when it comes to handing out the Earned Income Tax Credit. File it wrong and you might have to pay back the entire amount with interest or be banned to claim EITC for 2 long years.

Do you qualify for the Earned Income Tax Credit this tax season?

To understand this, answer the following questions:

• Is your income lower than the stated limit?

As a single filer without children, both your net annual income and gross adjusted income have to be lower than $21,430 to be eligible for the EITC. The net income is what you have earned throughout the tax year 2021 including your paycheck, additional tips, bonuses, and others. The gross adjusted income is the taxable income you come to after subtracting the applicable deductibles from the net income. For joint filers, the limit increases to $27,380. Both the single and joint limits increase progressively with the number of children you have.

• Is your child related to and dependent on you?

If you have 3 or more dependent children, the EITC income limit increases to $51,464 for single and $57,414 for joint filers. You can claim an EITC of $6,728 for the tax year 2021 filing your return in 2022. The child you claim on your tax return has to be your son/daughter, stepchild, sibling or half-sibling, adopted child, or niece/nephew. You must be related to the child in some form. And the child must be dependent on you where you have paid more than 50% of his/her living expenses and he/she must have stayed with you for at least 6 months in 2021.

• Did you earn at least $1 of your net income?

The name of the tax credit says it all. You must have earned at least $1 throughout the tax year 2021 to become eligible for the Earned Income Tax Credit. Your earnings from unemployment or pensions schemes do not count in EITC. However, the IRS treats the capital gains of your investments as earnings, and if the net gain is below $10,000, you can claim EITC depending on your total income and filing status.

• Did you live in the United States and agree to file your taxes independently?

To claim EITC, the IRS says that you need to have stayed in the United States for more than 6 months in the tax year 2021. You must also be filing your taxes independently where no other taxpayer is claiming you as his/her eligible dependent child on their return. If you are married but separated, you should not file your taxes jointly and produce a separation agreement to claim EITC as a single filer. You must not also have lived with your spouse for more than 6 months in 2021.

Claim EITC and benefit from the extra cash

Earned Income Tax Credit is specifically meant to ease the lives of low-wage workers. And the tax credit is entirely refundable, that is, the IRS sends the money to your account which it does not tax the next year. Hence, the EITC is yours to spend. You can either use it to run your daily expenses or fulfill a financial goal like buying a used car in Greer.

The inflated EITC of 2022 makes it easy for you to maintain both your life and buy a used car. At Family Auto of Greer, you can get financed with just $500 as down and just your EITC should be enough to get you started. Plus, we are a buy here pay here in Greer with a massive used car inventory. This means you can finance the used car you want with a bad or no credit score. So, visit Family Auto and make use of the

tax benefits this tax season.