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Famicos Tax Lab: What is the Earned Income Tax Credit?
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February 10, 2023
What is the Earned Income Tax Credit? The Earned Income Tax Credit is a tax break that provides support to low income tax-payers. The Earned Income Tax Credit in itself does various things; what impacts a taxpayer’s ability to receive this credit is that there must be actual earned income in order to make the initial decision. Next is the household size and lastly is the amount of the actual earned income.
There are various credits within tax preparation. These credits are referred to as non-refundable credits which are tax credits that are used to reduce the amount of tax obligation after the income has been finalized by utilization of any adjustments or deductions. There are also various refundable credits which supply the taxpayer with an amount generated as a refund which can also add to the overpayment that the taxpayer has supplied by way of employment dollars throughout the year via their income.
In the world of income tax filing the various types of income we receive throughout each year may qualify us to receive a break or reduction in the amount of tax we are expected to pay on that income during tax filing and may sometimes contribute to a refund. Income earned from working wages or self-employment are two such types of income and the Earned Income Tax Credit is the one refundable credit sought out on behalf of the taxpayers we serve.
Various things impact a taxpayer’s ability to receive this credit, such as:
• Type of income received
• Household size
• Amount of the earned income
• Age (years prior to 2021 taxpayers age 65 and over were not eligible to receive EIC)
Earned Income and AGE Limitations
To qualify for this credit for Tax Year 2021 your earned income and AGI must be less than:Income Number of Children $51,464 ($57,414 for married filing jointly) 3 or more $47,915 ($53,865 for married filing jointly) 2 $42,158 ($48, 108 for married filing jointly) 1 $21,430 ($27,380 for married filing jointly) 0
To learn more about taxes or get assistance with filing your tax return, come visit Famicos Foundation's Tax Prep Lab by scheduling an appointment at 216-791-6476 ext. 244.
