Qualifying For Earned Income Credit When You Haven’t Earned
Qualifying For Earned Income Credit When You Haven’t Earned, understanding why and how you can get a tax credit when you haven’t earned enough for the refund.
When the IRS uses the term “credit” it means that you may get money back even if you didn’t have any income tax withheld from your pay.
I mean the IRS specifically states that if need to earn $1 or above to be able to qualify. The minimum credit you can get back is $538 so it is a no brainer to figure out that some are getting back more then they earned.
What Numbers You Will Need To See If You Will Be Eligble
- Your earned income and adjusted gross income within certain limits; earned income is total everything you earned before what you are permitted to subtract and not pay taxes on. Adjusted Gross Income or AGI means after you deduct those tax exempt deductions. It is often referred to as line 37.
- Your earned income usually includes job wages, salary, tips and other taxable pay you get from your employer.
You can use the EITC Assistant made available by IRS to get an estimate on what your refund maybe.
Keep in mind that if you are in the military, clergy, or a child with disabilities you have your own set of rules. Here are the links, members of the military, members of the clergy, and taxpayers with certain types of disability income or children with disabilities.
Documentation You Need To Qualify
You, your spouse and any qualifying child you list on your tax return must each have a Social Security number that is valid for employment and that was issued on or before the due date of your return (including extensions).
your return using one of the following filing statuses:
- Married filing jointly
- Head of household
- Qualifying widow or widower
You can’t claim the EITC if your filing status is married filing separately.
If you, or your spouse, are a nonresident alien for any part of the year, you can’t claim the EITC unless your filing status is married filing jointly.
You may use that filing status only if one spouse is a U.S. citizen or resident alien and you choose to treat the nonresident spouse as a U.S. resident. See Publication 519, U.S. Tax Guide for Aliens (PDF) PDF, to find out if you are eligible for the EITC.
How does the Earned Income Tax Credit work?
The government gives you a credit if you earned under a specific bracket as you will see on the table below, For the year 2020, the earned income credits range from $538 to $6,660.
When you file your taxes is when you can claim it. If you had not claimed it in the past check to see if you can claim for those years to.
Other Qualifications Needed
Besides the income thresholds noted above, there are other qualification rules and requirements. Here are the eligibility rules.
- You must have at least $1 of earned income (pensions and unemployment don’t count).
- Your 2020 investment income must be $3,650 or less.
- You can’t claim the earned income tax credit if you’re married filing separately.
- You must not file Form 2555, Foreign Earned Income; or Form 2555-EZ, Foreign Earned Income Exclusion.
How much Can I Get?
Below are estimates for the maximum earned income tax credit amounts, plus the max you can earn before losing the benefit altogether. I do strongly suggest that you use the IRS calculator above.
for taxes due in April 2021
|Number of children||Maximum earned income tax credit||Max earnings, single or head of household filers||Max earnings, joint filers|
|3 or more||$6,660||$50,954||$56,844|
Kids And Earned Income Tax Credit
If you claim one or more children as part of your earned income credit, each must pass certain tests to qualify:
- The child can be your son, daughter, adopted child, stepchild, foster child or grandchild your brother, sister, half-brother or half-sister, stepbrother or stepsister or any of their children (your niece or nephew).
- A child must be under 19 at the end of the year and younger than you or your spouse if you’re filing jointly, OR the child must be under 24 if he or she was a full-time student. There’s no age limit for kids who are permanently and totally disabled.
- The child must have lived with you or your spouse in the United States for more than half the year.
For each child you’re claiming with the EIC, you’ll also need:
- A Social Security number (be sure to use the child’s name and Social Security number exactly as they appear on the Social Security card)
- His or her birthdate
If you don’t have kids
You can still qualify to get the EIC if you meet the income requirements for your filing status. To qualify, you must meet three more conditions:
- You must have resided in the United States for more than half the year.
- No one can claim you as a dependent or qualifying child on his or her tax return.
- You must be at least 25 but under 65 at the end of the year.
Keep in mint that this article is only to bring awareness but not meant as advice. In no way do I take responsibility for your decisions so please educate yourself further.
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