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IRS says millions of Americans missing this tax credit

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Millions of Americans are eligible for a tax credit that last year averaged more than $2,000, according to a statement just relased by the IRS. Some 20 percent of those entitled to the money don’t claim it.

“This is an extremely important tax credit that helps millions of hard-working people every year,” IRS Acting Commissioner Doug O’Donnell said in a Jan. 27 statement. “But each year, many people miss out on the credit because they don’t know about it or don’t realize they’re eligible.”

The Earned Income Tax Credit (EITC) was first approved by Congress in 1975, in part to offset the burden of Social Security taxes and to provide an employment incentive.

The tax credit is administered by the IRS, which stated that in 2022, roughly 31 million eligible Americans received about $64 billion in EITC payments. The tax credit amounted to more than $2,000 per eligible person on average.

The IRS estimates that about 20 percent of eligible taxpayers don’t claim the EITC. People particularly prone to overlooking the tax credit include those living in nontraditional homes (such as a grandparent raising a grandchild), those whose earnings declined or whose marital or parental status changed, people living in rural areas, veterans, the self-employed, and those with earnings below the tax return filing requirement.

“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,” O’Donnell said. “The IRS urges people to carefully … review this important credit; we don’t want people to miss out.”

EITC Eligibility

The EITC is considered a tax credit for lower-income filers, although there are a number of variations of income, filing status, and the number of dependents that have an impact on eligibility.

The EITC is for workers whose income didn’t exceed the following limits in 2022:

Taxpayers who meet the income requirements and have qualifying children can receive a maximum of $6,935.

For taxpayers with no dependents, the maximum EITC is $560.

Married but separated spouses who don’t file a joint tax return may also be eligible if they meet certain qualifications.

In order to qualify, people who don’t earn enough to be obligated to file a tax return must file one in order to claim the credit.

In order to navigate EITC eligibility, the IRS has a tool called the EITC Assistant that people can use to check if they qualify and how much they can expect to receive.

 

 

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