Earned Income Tax Credit Refund: Eligibility Criteria & Return Amount

 The Earned Income Tax Credit (EITC) is a tax credit that may lower your federal tax obligation or result in a cash refund when it comes to filing your taxes. Your Earned Income Tax Credit refund (EITC) could be up to $6,935 while also lowering the amount of taxes you owe. The most important requirement is having a job that earns money.

Earned Income Tax Credit Refund 

Workers with low and moderate incomes might benefit from the earned income tax credit. The tax credit varies from $560 to $6,935 for the 2022 tax year based on tax filing status, income, and the number of children.

Make sure to claim the EARNED INCOME TAX CREDIT REFUND (EITC) on your return when filing your taxes if you qualify for it. And the IRS encourages you to file an updated tax return so you can get that money back if you didn’t claim the earned income credit when you filed your taxes in the last three years while believing you qualified for it.

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EITC Eligibility Criteria

To qualify for the EITC, you must meet three requirements:

  1. You must work to generate income. You are not required to labour continuously. Your earnings, including investment income, cannot exceed the sums shown in the aforementioned chart. Wages, salaries, tips, employer-based disability benefits, self-employment income, military pay, and union strike compensation are all examples of earned income.
  2. You must have Social Security numbers that allow employment for you, your spouse, and any children who are eligible to receive the EITC. If you have a Social Security Number, you can apply for the EITC without having to be a citizen. If you submit your taxes using an Individual Taxpayer Identification Number, you cannot claim the federal EITC (ITIN).
  3. Children must be “qualified children” in order to be eligible for the EITC. Details are in the next section.

Additional prerequisites for eligibility include:

  • If you have an eligible child for the EITC who does not have a Social Security number, you may be able to apply for the EITC for workers without children.
  • Married Filing Separately: In general, if you are married filing separately, you are not eligible to get the EITC. If you are married and filing separately, you may still be eligible for the EITC.:
  • More than half the year, your eligible child resides with you.

At least one of the following conditions is met by you:

  • During the final six months of the tax year, neither you nor the qualifying child reside with your spouse.
  • You and your spouse do not reside together at the end of the year and have a separation decree, instrument, or agreement (not a divorce decree).

Earned Income Tax Credit Refund

Earned Income Tax Credit Refund 2023

Every year, the earned income tax credit is updated to reflect inflation. The earned income tax credit ranges from $600 to $7,430 for the 2023 tax year (taxes filed in 2024), depending on filing status and the number of children.

The maximum earned income tax credit amounts for 2023 are listed here, along with the highest income level at which you can still qualify for the credit.

Number of children Maximum earned income tax credit Max AGI, single or head of household filers Max AGI, married joint filers
0 $600 $17,640 $24,210
1 $3,995 $46,560 $53,120
2 $6,604 $52,918 $59,478
3 or more $7,430 $56,838

Frequently asked questions 

How do I apply for Earned Income Tax Credit (EITC)?

Even if you don’t owe any taxes or are not obliged to file, you must still file a tax return in order to collect the EITC. If you have a child who qualifies, you must submit Form 1040 together with the Schedule EIC listing the kids.

When Will I Get My Earned Income Tax Credit refund (EITC)?

By law, the IRS cannot issue your refund if you claim the credit before mid-February 2023. But, according to the IRS, taxpayers who submit their tax returns online, elect to have their refunds deposited directly into their bank accounts, and have no problems with their tax returns should anticipate receiving their refunds around February 28. Using the IRS’s Where’s My Refund page, you may always check the status of your return.

Who is a qualifying child?

  • A child must be a “qualified child” if you are claiming them as part of your EITC claim. Let’s go over the fundamentals before looking at the complete IRS criteria for determining whether your child qualifies as one. Your kid has to
  • Be your child (including an adopted child, a stepchild, or a foster child), sibling (including a half-sibling or stepsibling), or a descendant of your child or sibling, such as a grandchild, niece, or nephew.
  • have been younger than 19 at the end of 2022 or, if a full-time student, younger than 24. Moreover, they need to be younger than you. If they are under these age restrictions, they must have been handicapped permanently at any time during the year.
  • have spent more than half of the year residing in America with you.
  • get a Social Security number that is active.

What to do if your claim is audited by IRS?

If the IRS audits your credit claim, it could be because:

  • Your child does not qualify
  • Someone else claimed the same child

Observe the directions on the letter or notice that was sent to you. Please provide us copies of your identification to verify your right to credit, such as:

  • Proof of relationship
  • Proof of residency
  • Other records cited in your letter or notice

Send copies only; don’t submit the originals of your documents.

Impacts of an EIC-related error while claiming Earned Income Tax Credit refund (EITC)

An inaccuracy on your tax return not only causes the EIC portion of your refund to be delayed, sometimes for months, but it also puts you at risk of the IRS rejecting the full earned income credit.

IRS can reject your entire EIC claim if:

  • Any EIC amount that was mistakenly paid to you must be repaid, along with interest.
  • Before you may claim the EIC once more, you might need to submit Form 8862, “Information To Claim Certain Credits Following Disallowance.”
  • If the IRS determines that you filed your return with “reckless or willful disregard of the regulations,” you can be prohibited from claiming the EITC for the ensuing two years.
  • If the IRS determines you submitted your return falsely, you can be prohibited from claiming EITC for the ensuing ten years.

For more information about how to track Earned Income Tax Credit refund (EITC) visit the official website of IRS.

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