Millions of people who could possibly benefit from getting a check from the U.S. Treasury don’t. They are eligible to receive, in the words of the IRS, “the federal government’s largest benefit for workers,” the EITC (earned income tax credit).
The EITC is for “people who work and earn low to modest incomes.” What’s “low to modest” for the 2019 tax year?
There are different limits, depending on earnings, filing status and whether there are “qualifying children,” those who meet certain relationship, age and residency requirements.
Keep in mind that you don’t need to have children to be eligible. However, income caps are very low. Also, in all cases, investment income must be $3,600 or less.
For single filers and heads of households, gross income must not exceed the following amounts in order to be eligible for the EITC:
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a. $50,162 ($55,952 married filing jointly) with three or more qualifying children
b. $46,703 ($52,493 married filing jointly) with two qualifying children
c. $41,094 ($46,884 married filing jointly) with one qualifying child
d. $15,570 ($21,370 married filing jointly) with no qualifying children.
In prior years, the Treasury mailed out checks from $11 to $6,557 to those in the a. category; $10 to $5,828 in b.; $9 to $3,526 in c.; and $2 to $529 in d.
The IRS believes that 4 of 5 eligible taxpayers claim and get the EITC, leaving 1 out of 5 who do not. In 2019, 25 million people received about $63 billion in EITC. The average amount received was more than $2,400.
Who is potentially overlooking this credit?
According to the IRS, they may be living in nontraditional homes, such as a grandparent raising a grandchild; their earnings may have declined; their marital or parental status may have changed; they may not have children; they may have limited English skills; they may be veterans, living in rural areas or Native Americans; they may have earnings below the tax filing requirements. Perhaps they have disabilities or are raising children with disabilities.
If you know of anyone in this situation, give them a copy of this column. For more help, you can read an IRS table that I’ve posted on my website at www.juliejason.com/blog. You’ll also find a list of qualifying questions there as well.
If you go to EITC Assistant at www.irs.gov, you’ll find both English and Spanish versions to help you determine how to qualify (https://www.irs.gov/eitcassistant).
The tool will help you with your filing status, your child’s status as a qualifying child, and your eligibility for and the estimated amount of the EITC.
One more important point: We’ve been talking about the federal EITC. Many states have similar credits, including California, Connecticut and New York. For a full list, see https://bit.ly/2REw9iC.
There may be additional credits offered to residents of certain local municipalities, such as the District of Columbia and New York City.
Julie Jason, JD, LLM, a personal portfolio manager (Jackson, Grant of Stamford, Conn.) and author, welcomes your questions/comments at readers@juliejason.com.
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