The Tax Benefits That Could Land You A Larger Return
The Earned Income Tax Credit (EITC) can give low- and moderate-income individuals and families in their 2022 tax returns.
It’s tax time again and the best thing taxpayers can do is take advantage of any and all tax breaks possible. Even the Internal Revenue Service (IRS) urges taxpayers not to miss out on opportunities to get a larger tax refund. One of the best tax benefits available to low and moderate-income taxpayers is the Earned Income Tax Credit (EITC), but many people who could benefit from it don’t realize they are eligible.
The EITC is designed to give tax benefits to Americans who earned $59,187 or less in the previous year. “This is an extremely important tax credit that helps millions of hard-working people every year,” said Doug O’Donnell, IRS acting commissioner. “But each year, many people miss out on the credit because they don’t know about it or don’t realize they’re eligible.”
O’Donnell also said that the IRS hopes more taxpayers will access this tax benefit on their 2022 returns and mentioned that certain people may be more likely to be unaware of the benefit. “In particular, people who have experienced a major life change in the past year – in their job, marital status, a new child, or other factors – may qualify for the first time. The IRS urges people to carefully review this important credit; we don’t want people to miss out.”
Income limits for the EITC tax benefits vary depending on the taxpayers’ marital status, filing status, and the number of dependents they have. The highest income limit is $53,057 for taxpayers filing single with three or more qualifying children ($59,187 for married taxpayers filing jointly). At the low end of the range, taxpayers filing single with no dependents have an income limit of $16,480 ($22,610 for married taxpayers filing jointly).
People with investment income equal to $10,300 or less may also qualify for EITC tax benefits. The dependents of taxpayers using the EITC on their 2022 tax returns must be qualifying children who have a valid Social Security number. On average, taxpayers earned $2,000 or more from the EITC, which then applies to the taxes owed or increases the amount of their tax refund.
Last year, the IRS paid almost $64 billion in Earned Income Tax Credit benefits. This year, the maximum EITC credit is $6,935 per qualifying taxpayer. The maximum credit for applicants without dependents is $560.
Once you find out if you qualify for the EITC, it’s easy to claim your tax benefits. Simply file your tax return and claim the credit. The IRS encourages people who may not file a tax return to file one anyway to see if they qualify for the EITC.
The IRS estimates that about 20 percent of eligible taxpayers fail to claim their EITC tax benefits. These include taxpayers in rural areas, taxpayers without children or those who earn below the filing requirement, and those whose marital, parental, or income status changed. Other taxpayers who often miss out on the tax credit are veterans, Native Americans, those with limited English abilities, and taxpayers in non-traditional homes, such as grandparents raising their grandchildren.
Tax filing officially began on January 23 and the IRS estimates that refunds will show up within three weeks of filing. Refunds with the EITC take longer to process because they require more verification. Therefore, people who filed when tax season began will start seeing refunds by the end of February.
Use the EITC Assistant to see if you qualify for these tax benefits. If you want to receive your refund the fastest, be sure to file electronically and use direct deposit. Double-check your tax return to make sure all information is correct, as returns with errors and issues take longer to process.