Tax credits play a crucial role in offering financial support to numerous American families. These credits are sums that taxpayers can subtract directly from their taxes owed to the Internal Revenue Service (IRS), effectively reducing their overall tax liability. It’s worth noting that many taxpayers might be eligible for the Earned Income Tax Credit (EITC), a significant but often overlooked tax break during the tax filing process.
Twenty Percent of Taxpayers Miss Out on This Benefit
The Earned Income Tax Credit (EITC) is one of the tax credits that is frequently missed. Unlike the well-known Child Tax Credit, which is claimed regularly by eligible taxpayers each year, the EITC often goes unclaimed. Under Code Sec. 24, the Child Tax Credit currently allows a claim of $2,000 per qualifying child but is set to decrease to $1,000 the following year.
The EITC specifically benefits low-income working individuals or married couples, providing a variable tax relief based on the recipient’s income and number of children. Eligible taxpayers have three years from the original due date of their tax return to file and claim a refund for the EITC. The IRS states that if you were eligible, you could still claim the EITC for previous years.
Earned Income Tax Credit Eligibility Requirements
To be eligible for the Earned Income Tax Credit, applicants must meet the following criteria:
- Individuals with annual incomes below $25,511 without children or up to $66,819 with three or more children.
- Must be a U.S. citizen by birth or have been a resident for at least one year.
- Possess a valid Social Security Number (SSN)
- File a tax return for the fiscal year 2025
Those who qualify for the EITC should also check if they are eligible for other tax credits such as the Child Tax Credit, the Credit for Other Dependents, the Child and Dependent Care Credit, and Education Credits, as these often share similar income requirements.
For those who have not yet claimed their Earned Income Tax Credit for the past three years, here are the deadlines to keep in mind:
- For 2023, if you file your tax return by April 15, 2027
- For 2022, if you file your tax return by April 15, 2026
- For 2021, if you file your tax return by April 15, 2025
As of December 2024, about 23 million workers and families had claimed approximately $64 billion in benefits from the Earned Income Tax Credit.
Anticipate Your Tax Refunds
With the tax season underway, taxpayers can soon expect their refunds. The deadline to file your taxes this year is April 15, coinciding with the deadline to file for your 2021 Earned Income Tax Credit. You can anticipate receiving your tax returns for the 2024/2025 fiscal year within 10 days of filing. The IRS’s “Where’s My Refund” online tool can help you track the status of your refund.
If you find the process of filing for tax credits daunting, consider consulting a financial advisor or using the IRS’s online tools. Tax professionals can simplify the process and ensure compliance with all relevant tax laws.
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Calvin Baxter is an economic analyst specializing in the evolving US labor market. He leverages real data to provide you with concrete recommendations and help you adjust your professional strategies.