The earned income tax credit or earned income credit also known in short forms – EITC or EIC. It is a credit which benefits the well being of the working people whose income range is low to moderate. EIC is a refundable tax whose sake depends upon the tax payer’s salary and the number of children.
Earned Income Credit Age Limit
The people whose age lies in between 25 and 65. S/he must be a living resident of United States for at least more than 1⁄2 a year. Basically tax credit increases the amount of money in the recipient’s pocket which also qualifies for refund and the henceforth follows reduction in the tax amount.
Earned Income Credit Chart
The totality of earned income depends on income, other earning. It is also certainly dependent on total number of children. If a payer of the tax has no issue, then the maximal EIC is $538. Whereas, if there is only 1 child, the maximised range will move a little upwards which is $3584. The number of children exceeding 1 but not 2 will be benefited with $5920 EIC.
The rest, if the number is 3 or more, then EIC will be at it’s maximum point, i.e, $6660. The less the earning and the more the number of children, the EIC will be more and vice versa. Earning and EIC is indirectly related. Number of children and EIC is directly related. This was the basic chart according to which the EIC is enjoyed.
Earned Income Credit 2021 Refund Rate
The earned income tax credit has been the wildly demanded refundable credit. EIC supports the less –income group people economically but does not support hugely to the childless worker. Though the children who are adopted or disabled gets the support from their working parents via EITC. The refund rate of EITC, is almost 96%.
The refund ability of the above-mentioned tax, tries to create a positive parity among the different income groups. Many propositions came up to enlarge the EITC refundability rate for the childless workers or at least expand their age limit.
Another tax credit which is highly refundable is CTC or Child Tax Credit. This tax credit is available only to the parents of dependent children. Although, it is also same as EITC for this tax is also determined upon number of children and the income range.
Earned Income Credit Calculator
In order to calculate EITC, the tool requires certain information. They are, filing status ( married fillingjointly / widower/ house hold owner/ single/ married filling separately), the total number of qualifying
children ( age below 19, stayed in US for above 1⁄2 a year), the earned income ( wages, salaries etc.), self- employment income ( where it is required to pay self employment taxes), investment income ( taxable interest, capital gains etc.), non – taxable combat pay, gross income ( addition of all income) , qualifying age, child status, dependency status and residence status.
All the above Information helps to calculate the EITC for a certain year. One needs to choose among
options provided within the calculator.
Earned Income Credit Qualifications
A taxpayer under Earned Income Credit needs to qualify all the EITC phases for being a successful qualified taxpayer. If the payer is single filler with none dependents earning upto $15570, is absolutely eligible for $529 in EITC. Whereas, on the other hand if the filler is joint then they can gain upto $5828, only if the total earned income of both is below $52952.
The ones who are filling separately does not qualify for the above. The taxpayer should be having qualifying children for expecting the EITC. The child cannot be qualifying also for another working married couple.
Range of age varying between 25 – 65 are always eligible for the aforementioned topic. The taxpayer will have to be a citizen of US or must stay that year in which s/he expects EITC.
The payer will have to have a job of his/her own or self-employed for earning qualifying income. If a person satisfies all the checkbox, s/he is set prepared to enjoy a refundable tax credit which also ensures certain tax returns. Hopefully, the article came up to your minimum use in understanding the EITC at the very base level.
Source: Earned Income Credit