Low and moderate income taxpayers can benefit from the Earned Income Tax Credit

Photo (c) Ronnie Kaufman - Getty Images

The IRS urges taxpayers not to miss out on the opportunity to get money back

The 2023 tax season has begun, and the Internal Revenue Service (IRS) is sharing tips for taxpayers to consider as they start preparing to file their 2022 taxes. 

Recently, the agency promoted the Earned Income Tax Credit (EITC) – a credit designed to give a tax break to Americans who earned $59,187 or less in the previous year. By calling attention to this credit, the IRS hopes that more taxpayers will take advantage of it this tax season. 

“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. 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.” 

Who’s eligible? 

The EITC is geared toward taxpayers who are low- to moderate-income workers. Taxpayers with children and who are married are likely to receive higher credits than those without children. 

Here are the income limits for the EITC for 2022 taxes: 

  • $53,057 ($59,187 for married taxpayers filing jointly) – with three or more qualifying children with valid Social Security numbers 

  • $49,339 ($55,529 for married taxpayers filing jointly) – with two qualifying children with valid Social Security numbers 

  • $43,492 ($49,622 for married taxpayers filing jointly) – with one qualifying child with a valid Social Security number 

  • $16,480 ($22,610 for married taxpayers filing jointly) – with no qualifying children who have Social Security numbers 

  • Investment income equal to $10,300 or less 

Last year, the IRS paid out nearly $64 billion in EITC. Overall, taxpayers earned $2,000 or more from the credit, which can be used either to reduce the amount of taxes owed or to boost tax refunds. 

This year, the maximum EITC credit is $6,935. Last year, that figure was at $6,728. However, for taxpayers without dependents, the maximum credit is $560. 

How to claim the EITC

The IRS explained that taxpayers who are eligible for the EITC must file their tax return and claim the credit. The agency also encourages those who may not file a tax return to do so to see if they qualify for the credit. 

The IRS hopes that more taxpayers will take advantage of this credit, as the agency anticipates that about 20% of eligible taxpayers don’t claim it. Some categories of Americans who may be skipping the EITC, but who should inquire about qualifying: 

  • Taxpayers living in rural areas

  • Taxpayers who earn below the filing requirement

  • Taxpayers whose income decreased or whose marital or parental status changed

  • Taxpayers who are veterans

  • Taxpayers without children

  • Taxpayers in non-traditional homes (grandparents raising grandchildren)

  • Taxpayers who are Native Americans 

  • Taxpayers with limited English abilities 

To avoid fraud and to comply with the PATH Act, tax returns with the EITC take longer to process to ensure all information is valid and accurate. This means that taxpayers who qualify for and receive the EITC will need to wait a bit longer to see their refunds. 

While filing officially opened on January 23, and the IRS anticipates that refunds will get to taxpayers within three weeks of filing, refunds with the EITC will start to be issued in mid-February, with most taxpayers seeing the refund by the end of February.

The IRS reports that taxpayers will receive their refunds fastest when they file electronically, use direct deposit, and have no errors or issues on their returns. 

For the full EITC requirements and to check eligibility, click here

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