An earned income credit for low and moderate-income employees.
The EIC (earned income tax credit), is a refundable tax credit for low and medium-income employees. For the 2022 tax year, the earned income credit goes from $560 to $6,935 based on income, tax-filing status, and the number of dependents. In 2023, the credit will increase from $600 to $7,430. Individuals without children are eligible for the EIC.
If you are within the rules for the credit, make sure to claim it on your return when you file your taxes. If you didn’t, for the last three years, apply for the EIC on your taxes, but you believe you meet the requirements, the IRS urges you to file an amended tax return so you can get those dollars back.
Can I Claim the Earned Income Tax Credit?
While thousands of households already claim this tax credit, the IRS states many more workers are eligible for the credit but don’t take advantage of it. The guidelines were just liberalized, so more tax filers are eligible. Don’t miss out on a credit that could increase your refund check.
If you and your spouse, when filing taxes together, earn under $59,186 ($53,050 for heads of households, surviving spouses, or individuals) in 2022, you may qualify for this tax credit. There are several benefits to filing for the EIC including:
- The credit decreases any federal tax you owe.
- If the credit gets rid of your tax bill, and some money is left over, you can get that money as a tax refund.
Qualifying for the Earned Income Tax Credit
First things first, you must qualify, and your income must be within the limits. If you have children, they must qualify as well.
If you satisfy all these requirements, you could get an earned tax credit for around $6,935 for 2022 based on the number of dependents you have and your income.
Once you discover that you qualify for the credit, use the EIC table found in the Form 1040 instruction book to search for your income and see the credit amount you should get. You usually qualify for the earned income credit if:
- You are a U.S. citizen or resident.
- You have wages from your own business, an employer, union strike benefits, and certain long-term disability benefits.
- You, your spouse, and your dependents have social security numbers.
- You did not get over $10,300 in investment income such as interest or dividends, or income from rentals, royalties, or stock and other asset sales during 2022.
- You are single or, if married, you and your spouse don’t file separately.
- You and your spouse are not considered as a qualifying child of someone else.
So much has changed in the tax guidelines this year, and the new laws are taking people by surprise. For many people, it can be difficult to know which tax credits they qualify for and why. Contact us today to help you file your taxes correctly. We can help you figure out if you qualify for the earned income credit to maximize your tax refund.