There’s nothing like a good tax credit. Truly, nothing at all seems to feel quite as good during tax season as discovering you qualify for a tax credit or tax deduction you didn’t expect.
The benefit of qualifying for a tax credit can range from hundreds of dollars saved to thousands or more, depending on your tax filing status, income, and a number of other factors. Moreover, they can be incredibly beneficial when they are designed specifically to benefit working and poor taxpayers, for whom every penny really does count.
When you’re filing your taxes (or placing them in our expertly qualified hands, hint hint), you deserve to know everything there is about the tax credits and deductions you have available to you. You deserve to have these tools at your disposal to maximize your deductions and supercharge your tax refund.
We’re here to walk you through the Earned Income Tax Credit.
In this article, we’ll be explaining what the Earned Income Tax Credit, or EITC, is. We’ll discuss who qualifies for the EITC, and a few other need-to-know facts about the EITC that you should keep in mind for tax season.
The EITC, according to the IRS:
“The Earned Income Tax Credit, EITC or EIC, is a benefit for working people with low to moderate income. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file. EITC reduces the amount of tax you owe and may give you a refund.”
In layman’s terms, the EITC is a tax credit designed to benefit working people who don’t have high incomes. As opposed to a tax deduction, which impacts your taxable income, a tax credit is money that taxpayers can subtract from their tax bill altogether.
So, if you qualify for the Earned Income Tax Credit, it will reduce the tax you actually owe. Now, let’s answer the next natural question.
Not everyone qualifies for the EITC, but many people do. Here’s the basic list of qualifications, according to the IRS:
Lots of information, right? Here’s the boiled down version.
You might qualify for the EITC if you:
If you want to see if you qualify for the EITC, the IRS has a handy EITC Assistant for you to check out.
The early bird gets the worm, but the early EITC filer still has to wait.
Typically, filing your taxes early during tax season is a sure-fire way to beat the rush and delays that often come with last-minute filing. However, if you claim the Earned Income Tax Credit, the IRS legally can’t issue your tax refund before mid-February. So, if you’re the kind of person who likes to get your tax return filing done and out of the way as early as possible, just keep in mind that your tax refund may take a little longer than usual to find its way back to you.
Hopefully, you have a better sense of whether or not the EITC may work for your tax filing situation. If you have more questions about your tax return, we’re always here to lend an ear and get your tax return expertly prepared. You work hard, and you deserve to have every tax tool at your disposal to save yourself money and boost your refund.