Taxes 2022: A tax credit could give you up to $6728
It is a refundable tax credit that can provide relief for people with low or moderate income. We explain how much you can request this tax season and if you should take advantage of a change in its rules due to the pandemic.
If you are a worker with a low or moderate income, check if you can claim on your tax return a federal credit available to taxpayers with or without dependent children.
It is the Earned Income Tax Credit (EITC), which can represent relief of up to $1,502 for people without children and up to $6,728 for families with three or more children.
It provides additional tax relief for eligible families who also receive another key credit, the Child Tax Credit, as it can reduce your debt with the Internal Revenue Service (IRS) or allow you to receive a refund.
Who benefits from this tax credit?
It benefits people without dependent children, who will be able to receive a credit of up to $1,502, almost triple the $560 that will be in force next year.
The second can be used by all eligible taxpayers and allows income earned in 2019 — the year before the pandemic — to be placed on the tax return if that amount causes you to receive a larger credit. The IRS explained that in some cases, people who had a higher income in 2019 can get a larger credit. It is important that you calculate which number is best for you to use in your statement, if the income of 2019 or 2021.
The agency recommended that returns be filed electronically to avoid errors and request direct deposit to speed up refunds. https://t.co/F3CQSyPMU7
– Univision News (@UniNoticias) January 12, 2022
Below we explain the main requirements of the Earned Income Tax Credit and the approved amounts for the 2021 tax year (which corresponds to the taxes that are filed in this 2022 season):
How much can I claim for this credit?
To assess whether you qualify for the Earned Income Tax Credit, you must review the table with the amounts corresponding to tax year 2021. The amount of the credit varies according to your 'adjusted gross income' (AGI) and the number of children you have as dependents.
It will also depend on the status in which you file your return: if you file as a single person, head of household, widow or married filing separately or if you file as a married person filing jointly.
1. You can claim up to $1,502 if: you have no qualifying children, you earned up to $21,430 if you file separately, or you earned up to $27,380 if you file jointly.
2. You can claim up to $3,618 if: you have a qualifying child, earned up to $42,158 if filing separately, or earned up to $48,108 if filing jointly.
3. You can claim up to $5,980 if: you have two qualifying children, earned up to $47,915 if filing jointly, or earned up to $53,865 if filing jointly.
4. You can claim up to $6,728 if: you have three or more qualifying children and earned up to $51,464 filing separately or earned up to $57,414 filing jointly.
What is 'earned income'?
It may sound redundant, but to claim this credit you need to have recorded income from work.
The most common earned income is wages or salary where federal income taxes are withheld. That is, the amount that appears at the top of the W-2 form.
Also the income where the employer did not withhold taxes, the situation in which, for example, those who provide professional services, sell products online and perform temporary work on request.
However, earned income is also money earned from self-employment if you own a business, are a minister in a religious order, or received certain benefits.
Experts recommend reviewing your situation in the IRS requirements.
Pensions, annuities, Social Security benefits, unemployment benefits, and child or divorced spouse pensions, among other scenarios, do not represent earned income.
Author: Patricia Chung 7:03 am