With tax season right around the corner, many Texans might be eligible for a little-known tax credit that taxpayers do not realize they qualify for.
The Earned Income Tax Credit (EITC), aimed at workers and families who make less than $59,187, is regularly missed by millions of tax filers.
Last year, a reported 31 million workers received the EITC, or roughly $64 billion, with the average credit amount coming in at more than $2,000.
“Each year, many people miss out on the credit because they don’t know about it or don’t realize they’re eligible,” IRS Acting Commissioner Doug O’Donnell explained, reported Advanced Local. “In particular, people who have experienced a major life change in the past year — in their job, marital status, a new child or other factors — may qualify for the first time.”
“The IRS urges people to carefully … review this important credit; we don’t want people to miss out,” he continued.
The IRS suggested around 20% of taxpayers eligible for the EITC don’t claim the credit, amounting to roughly 6.2 million workers and families. Groups believed to often miss out on EITC benefits include non-traditional homes where a grandparent has custody of a grandchild, people with “limited English skills,” veterans, and those who live in rural parts of the country.
Additionally, workers whose income qualifies for the tax credit must file a tax return and meet certain requirements to take advantage of the EITC. Workers’ investment income also must be $10,300 or less.
To qualify, workers’ adjusted gross income must be less than $53,057 with three or more qualifying children with valid Social Security numbers in 2022.
For those married filing jointly, the income threshold for the EITC is $59,187, with three or more qualifying kids. The most that workers who are married filing jointly with three or more qualifying children can receive from the IRS is $6,935. For workers that are married and filing jointly with 2 dependents, the income threshold is $55,529. For those that are married and filing jointly with 1 qualifying child, the income threshold is $49,622.
If you do not have dependents, the maximum EITC refund is $560 for single tax filers with an adjusted gross income of less than $16,480 in 2022. For those married filing jointly without dependents, the maximum adjusted gross income to qualify is $22,610.
The EITC is so underutilized that the IRS even has an Earned Income Tax Credit awareness day, which fell on January 27 this year.