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Earned Income Credit: Know the Basics and Learn If You Qualify You may have heard about Earned Income Credit before, and there may be questions circling around your mind right now. What exactly is earned income credit? Do I qualify for it? How I do claim one? We have compiled answers to these questions as we provide you with Earned Income Credit crash sheet.
What is Earned Income Credit?Earned Income Credit also known as Earned Income Tax Credit (EIC or EITC) is a refundable tax credit for workers with low to moderate-income. It is also coined as a “work bonus plan” to supplement the said workers. This year 2021, the earned income credit ranges from $1,502 to $6,728. The amount someone can receive depends on income, tax filing status, and the number of children. We all know that 2020 has been tough due to the COVID-19 pandemic and taxpayers reported lower income compared to 2019.
Who Qualifies for Earned Income Credit?As mentioned before, EIC applies only to taxpayers with low to moderate-income which is set at $3650 for 2020. This applies whether they have qualifying dependents or not. To claim the EIC for 2020, a taxpayer with no qualifying dependent must meet the following criteria:
A qualified dependent, as defined by the tax law, is a child who is related to the taxpayer by birth, adoption, or fostering. The child can also be a sibling or the child of a sibling such as a niece or a nephew. For those taxpayers with qualifying dependent, they must meet the following criteria:
How to Qualify for Earned Income Credit?If you qualify for earned income credit, the next question is “how do I qualify?” These are the ways how one can quality and claim earned income credit.
For married couples, the table below shows maximum earned income tax credit amounts, plus the max a couple can earn before losing the benefit altogether. This applies to taxes due on April 20201.
In Summary
We just debunked how earned income credit works and how someone can qualify. It is best to claim it when you do your taxes to fully enjoy the benefits of earned income credit. After all, it’s a government-mandated benefit aimed to help us out, and it won’t hurt to do so. The post Earned Income Credit: Know the Basics and Learn If You Qualify appeared first on Credit Planned. http://ifttt.com/images/no_image_card.png https://creditplanned.com/earned-income-credit-know-the-basics-and-learn-if-you-qualify/
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