Earned Income Tax Credit (EITC): How it works and who qualifies
Find out what the Earned Income Tax Credit is all about! This program aims to help low to moderate-income families. Understand how it works and who qualifies! Read on for more.
EITC: tax break to low-to-moderate income workers and families
Do you want to increase the amount of money in your monthly budget? Then the Earned Income Tax Credit might provide what you need!
This federal government program will help supplement low and moderate-income families’ income. Keep reading and learn more about EITC, including the benefits and who qualifies.
What is the Earned Income Tax Credit program, and who is it for?
Also known as EITC, the Earned Income Tax Credit is a federal program that aims to help families get a tax break.
Then if you don’t make much money, especially if you have children, this can add up.
The tax credit lowers the amount of taxes you must pay if you qualify.
Also, if the credit is worth more than you owe, you get the rest of the money back in your tax refund.
This program is available in all the U.S., including Puerto Rico, the U.S. Virgin Islands, GUAM, the Commonwealth of the Northern Marina Islands, and American Samoa.
Nevertheless, many states might have their version of the EITC, which can add up more money to your tax refund.
You only need to find out if your state of residence offers a state-level tax refund.
What are the benefits of the Earned Income Tax Credit program?
The EITC program is an excellent way to ensure your and your family’s income. It has reduced poverty and increased work participation over the years.
In 2022, the earned income credit ranged from $560 to $6,935, depending on the applicant’s tax-filling status, income, and the number of children.
However, in 2023, it has increased. As a result, the credit will be worth $600 to $7,430. Usually, the bigger the family, the higher the credit will be.
Who qualifies for EITC?
As said, the EITC program aims to help low and moderate-income families have some extra money every month.
However, they need to meet some eligibility criteria to access this amount. These are the main requirements to claim the EITC:
- You need to work or earn income. It can be from wages, salary, employer-based disability, self-employment income, military pay, or union strike benefits;
- You must have a valid Social Security Number;
- You must be a U.S. citizen or resident alien all year.
In case you claim children for the EITC, they must be a “qualifying child.”
There are also some eligibility requirements based on Marital Status. You can qualify if you are head of the house, qualifying widow, married (filing jointly or separately), or single.
How can you apply for EITC?
If you qualify for the EITC, it is time to apply. If you want to know how the application process works, read on! The following article will explain everything you need.
About the author / Luis Felipe Regueira
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