What is the refundable portion of the earned income tax credit, and how much can I get?
LOW-INCOME employees can get a tax benefit worth more than $1,500 this year to help them make ends meet.
The maximum payment for workers without children, known as the earned income tax credit (EITC), was previously worth $543.
Only under the American Rescue Plan has it been increased to $1,502 for 2021.
Working families, on the other hand, may be able to get even more, depending on the number of children they have. We’ll go through everything you need to know below.
Low-income working families and low-income workers without children are eligible for the earned income tax credit.
From the initial dollar until the credit reaches its maximum, the credit is equal to a fixed proportion of revenue.
The maximum credit is paid until earnings reach a certain threshold, after which it decreases with each successive dollar until there is no credit left.
If the EITC is worth more than what you owe the IRS, it will be used to offset any taxes owed, or you will receive a refund if it is worth more than what you owe the IRS.
Workers with a low or moderate income are eligible for the credit.
The income thresholds for childless employees have been raised for 2021, going from $15,820 to $21,430 for taxpayers filing alone.
While married couples can now make a combined income of up to $27,380 per year, up from $21,710 previously.
As previously stated, you can receive up to $1,502 for the tax year 2021.
The amount of EITC that parents with qualified dependents can receive is determined by the number of children they have.
Families with one child, for example, can get up to $3,618 per year and earn up to $42,158 per year if they file as single taxpayers.
Those with two children, on the other hand, can receive up to $5,980 in credits if they earn a maximum of $47,915 per year.
Parents with three children are eligible for up to $6,728 if they earn less than $51,464 as single taxpayers.
Even if you don’t owe any taxes or aren’t required to file, you must file a tax return to claim it.
The EITC is then paid out in a lump sum once a year.
To put it another way, while the credit is valid for the 2021 tax year, you won’t receive it until after you’ve submitted your tax return the following year.
In the meanwhile, EITC credits for 2020 must be claimed on a 2020 tax return.
The deadline for submitting this is Friday, October 15, but only for those who sought an extension.
Meanwhile, millions of families are expected to get child tax credit payments this week; we explain how much your family should receive.
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