For those filing taxes for the first time this year – fair warning – you’re going to find yourself in a pile of tax returns, receipts and complex tax jargon.
Among the large glossary of terms, make sure you know what “earned income tax credit” is so you can save or bank more money.
The Working Income Tax Credit is tax relief for families and individuals with low to moderate incomes. According to the Get it Back Campaign, a tax resources effort, the EITC is a credit that will give you money back during tax season or reduce federal taxes you owe.
California also has its own earned income tax credit, known as CalEITC.
Here’s how to see if you qualify
Both the state of California and the federal government have earned income tax credits with respective requirements.
- Be at least 18 years old or have an eligible child
- Have earned income within certain limits ($30,000 maximum)
- Live in California for more than six months
- Have a social security number or an individual tax identification number for yourself, your spouse and your eligible child, if applicable.
- Do not use “married/separate RDP deposit” if married
To qualify for the earned income tax credit, you must meet certain basic criteria, according to the Internal Revenue Service. First, you must be a worker and earn less than $57,414.
The maximum income changes depending on your deposit status. For example, if you are filing as a single adult, declaring no children or relatives, the maximum adjusted gross income is $21,430. The IRS provides a chart on its website for qualifying brackets.
If you have investment income in the 2021 tax year, it must be less than $10,000.
Other requirements outlined by the IRS include the following:
Have a social security number when you file your 2021 tax return
Have U.S. citizenship or year-round resident alien status
Did not file Form 2555, a form for income earned abroad
If you are a member of the military or clergy, or have a disability or have relatives who do, you will have additional rules and specifications.
Claim without children
If you are applying for the EITC without children, you will need to meet the basic requirements as well as:
Have a principal residence in the United States for more than half of the tax year. This includes all 50 states, DC and military bases nationwide.
Someone doesn’t report you as an eligible child on their tax return
Be 19 years old. But if you are a former foster home or qualified homeless youth, you can be at least 18 years old.
If you are a student, you must be 24 or older.
IRS EITC Assistant
If you need help determining if you can claim an earned income tax credit, you can use the IRS EITC online tool.
The digital form will tell you your eligibility, whether you have eligible children or parents, your credit amount, and your filing status. You just need to have your income statements, tax documents, and expense records nearby.
How much could I get?
The California Franchise Tax Board has estimates on how much you could get when you file your 2021 return.
If you have:
- No children, maximum income of $30,000, then you can get up to $255 on CalEITC and up to $1,502 on IRS EITC.
- One eligible child, maximum income of $30,000, then you can get up to $1,698 on CalEITC and up to $3,618 on IRS EITC.
Two children, maximum income of $30,000, you can get up to $2,809 on CalEITC and up to $5,980 on IRS EITC.
Three or more children, maximum income of $30,000, you can get up to $3,160 on CalEITC and up to $6,728 on IRS EITC.
How to check refund status
If you are an early bird and have already filed your taxes, you can check the status of your refund on the IRS website. According to the agency, most refunds will arrive by March 1. However, if you are filing for EITC, yours may be delayed.