News

Millions more people without children are now eligible for a tax credit that could save them thousands of dollars

Before this year’s round of changes, the EITC was only available to people without dependents between the ages of 25 and 64.Pakin Songmor

  • The Earned Income Tax Credit is now available to people who are at least 19 years old.

  • Depending on his income and the number of children, filers can save up to $6,935.

  • The EITC is a rare break for low-income childless adults, who are often excluded from assistance programs.

Millions more low- and middle-income people will keep more money this year, as long as they remember to fill out the right form come tax season.

The Internal Revenue Service (IRS) expanded the Earned Income Tax Credit (EITC) eligibility criteria last week, giving a permanent green light to those who are at least 19 without children, as well as at 18 years old. recently released from foster care or experiencing homelessness.

Before this year’s round of changes, the EITC was only available to people between the ages of 25 and 64, as well as older and younger Americans with dependents.

The IRS change reflects the federal government’s continued expansions of the EITC to help more Americans in financial difficulty during the pandemic, with President Joe Biden amending it last year under American Rescue. Plan Act, granting temporary eligibility to all filers over 18 without children, a change that’s now permanent. People who apply for an EITC can claim up to nearly $7,000 in credits.

“There are important changes to the EITC that will help this credit reach more hard-working families this year,” IRS Commissioner Chuck Rettig said in a statement. “We urge those potentially eligible for this valuable credit to review the guidelines; every year many people overlook this and leave money on the table.”

Tax credit targets benefit gap for low-income people without children

The EITC has always existed as a tax relief for low-to-moderate income workers, with credits ranging from $560 to $6,935 for 2022. The exact amount someone will receive will depend on their income and declaration status.

Until this year, having children was an additional qualifier. The U.S. bailout introduced a temporary waiver of the child requirement, roughly tripling the maximum credit for childless workers from $538 to $1,502 last year, as well as extending the eligibility for Americans without children under 25 and over 65.

The income eligibility requirement always depends on the number of children a given filer has. Filers without children, for example, must have incomes below $21,430 to qualify, or $27,380 if filing jointly. The maximum a given household can earn while still qualifying for the credit is $57,414, the cap for a married couple filing jointly with three or more children.

The less you earn, the higher your EITC. Since it is a refundable tax credit, low-income taxpayers who have little (or no) income tax can still receive the full amount of the credit as a tax refund. .

Filers whose refunds are partially or entirely based on the EITC will get their money after mid-February, a deadline the IRS requires to screen for fraud, Sallie Mullins Thompson, a certified financial planner, told Jean Fogler of ‘Insider in December.

The expansion of the EITC will provide additional assistance to low-income households without children, a demographic group typically overlooked by federal assistance programs. Temporary Assistance for Needy Families (TANF), for example, is mainly aimed at families with children. Its money goes to general assistance programs, which support a broader population, including non-parents, in just 25 states. Benefits in those states for working people without children totaled less than half a million as of December 2019, according to the Center on Budget and Policy Priorities (CBPP). Most of these programs are limited to people with disabilities or health conditions, writes the CBPP.

Additionally, housing assistance programs prioritize people with disabilities and the elderly, according to the CBPP, and because 12 states have not implemented Medicaid’s expansion of the Affordable Care Act, childless and low-income adults often do not have health insurance. This makes the EITC a rare chance for relief, especially as the childless elderly population grows.

Read the original article on Business Insider

source: news.yahoo.com

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button