Let’s start by answering the question “What is the Earned Income Tax Credit?” also known as EITC, we will use the abbreviation in the rest of the article. The first word in the EITC is earned, which means you must have worked for someone in the past year or have a business to receive the credit. Credit is for people with low income, credit begins to disappear the more money you earn and not the other way around.
Do you qualify?
Just because you have worked does not mean that you automatically qualify for these credits, there are guidelines that we must follow. The biggest surprise about this credit is the age range that most people don’t know you must be between the ages of 25 and 65. You can receive this credit even if you don’t have children. You cannot receive this credit for your parents. The following people will qualify you for this credit:
• Siblings: sister, brother, stepbrother, stepsister, half brother of half sister
• Children: son, daughter, stepson, adopted son, grandson
• Relatives: nephew, nephew
The person who qualifies must be 19 years or younger. If they go to school they must be 24 years old or younger, younger than you or totally disabled they can be any age.
They must live with you for more than half the year and did not provide more than half of their own support. The qualifying person should not file a joint return or, if they file a joint return, they should be reimbursed for the withheld income or estimated tax payments.
Marital status for EITC purposes
The states for EITC filing purposes are: Married Filing Jointly (MFJ), Single, Head of Household (HOH), or Widowed.
How much money can you receive?
The most important part is how much your refund is. The EITC can help reduce the amount you owe in federal and state taxes. Yes, California has an earned income tax credit. If your filing status is Single, MFJ, HOH or Widowed, your adjusted income must be less than $ 15,010 without qualifying children, the adjusted income of a qualifying child must be less than $ 39,617, the income of two children less than $ 45,007, the income of three or more children must be less than $ 48,350.
Married filing a joint adjusted income return must be less than $ 20,600 without children, the adjusted income of one child must be less than $ 45,207, two children less than $ 50,597, the adjusted income of three or more children must be less than $ 53,950. Your investment income cannot exceed $ 3,450.
The maximum EITC credit for childlessness is $ 510. Some people might think this is not a lot of money, as it helps reduce the amount of money you owe to the IRS. This is GREAT considering there was a time when you couldn’t get this credit without children. The maximum credit for one child is $ 3,400, two children $ 5,616, three children $ 6,318. The increase from one child to two children is $ 2,216 while going from two children to three is $ 702, since you can see that the money decreases when you go from two to three children.
Add credit to money withheld from your check each year for a hefty refund.
Bring the documents below to present
If someone else is assisting you with your return, please bring them the following documents.
• Social Security cards, a Social Security number verification letter, or other US government document verification for everyone you may include on the return.
• Birth dates of all people you can include when you return.
• Copies of last year’s federal and state returns, if you have them.
• All income statements: Forms W-2 and 1099, Social Security, unemployment, and other statements, such as pensions, stocks, interest, and any documents that show taxes withheld. If you own or run a business or farm, collect records of all your income.
• All expense records, such as tuition, mortgage interest, or real estate taxes. If you own or run a business or farm, collect records of all your expenses.
• All reporting forms, such as 1095-A, 1095-B, or 1095-C.
• Bank routing numbers and account numbers to directly deposit any refund.
• Information on dependent child care: name and address of paid caregivers and their Social Security number or other tax identification number.
Thank you for taking the time to read the EITC information.