Every year, billions of dollars in tax credits go unclaimed. Could you be one of the 5 million eligible taxpayers who could receive extra money? Don’t miss out!
What is the Earned Income Tax Credit? The Earned Income Tax Credit, also called the EITC, is a benefit for working people with low-to-moderate income. It is different from a tax deduction, which reduces the amount of income that your tax is calculated on. Credit is actually money back on your tax bill. It is used to offset the amount you owe on taxes, and if income tax has already been withheld, the EITC can provide a larger refund after taxes have been filed.
Am I eligible? One way to find out is to use the IRS’s Earned Income Tax Credit Assistant to help you figure out how much you qualify for this year. The assistant is available in English or Spanish. You can even use the information to catch up on credits missed in years past. The maximum credit for the 2020 tax year is $6,660, and the maximum income to qualify for any credit is $56,844. However, the amount of the credit is figured based on family size, income, age, and how you file. For example, the credit for those filing as single/head of household is calculated differently than the credit for those filing jointly. You can see more on a chart provided by the IRS.
Extra for Marylanders. Employees who meet all of the federal requirements may be eligible for a Maryland credit, up to half of the federal EITC. However, they will not receive credit for more than their total tax obligation.
How do I get it? Most importantly, file a tax return. You can’t get the credit without filing. Filling out a tax return is extra important in 2021 to make sure you are also receiving any Economic Impact Payments and any other extra COVID income benefits.
Help, tax returns are complicated! If your income is below $57,000, you could qualify for Volunteer Income Tax Assistance (VITA). This service can also be available to those with disabilities, who are over 60, or those with limited English proficiency. If your income is above this threshold, there are several other free or low-cost resources available to help with tax return preparation.
The EITC is available to more people than ever before, including individuals without children. The purpose is to give workers and their families a greater portion of their income to keep and use. But, you can’t get the credit without filling out your tax return.