1 in 5 Tax-Filers Loses Out on This Credit. Don’t Miss Out

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

It’s a lucrative tax break you shouldn’t pass up. 

At this point, many people are in the process of finalizing their 2022 tax returns. But some people may not be filing a tax return at all.

Workers with low-enough incomes don’t have to file a tax return, but doing so could work to their benefit. That’s because they may be eligible for money back from the IRS thanks to the Earned Income Tax Credit, or EITC.

The problem with the EITC, though, is that many people don’t know about it. And as a result, they lose out on money that might otherwise get to land in their bank accounts.

Don’t miss out on money that’s yours

In a recent interview, Mark Steber, Chief Tax Information Officer at Jackson Hewitt, encouraged tax-filers to review the tax credits they’re eligible to receive before finalizing their returns. And he made a point to mention that the EITC is, sadly, a credit that’s often overlooked.

Now one thing you should know about the IRS, said Steber, is that it’s “not in the business of making sure that you got all of your benefits.” So if you’re eligible for the EITC but don’t claim it, that’s your financial loss.

What makes the EITC so valuable is that it’s fully refundable. Many tax credits will only reduce your tax liability down to $0. When a credit is fully refundable, you get paid its full value even if you owe the IRS no money at all.

In fact, in 2021, the Child Tax Credit not only saw its maximum value increase, but became fully refundable. That allowed a lot of households to benefit tremendously.

What’s the EITC worth, and who’s eligible?

Since many people are still tackling their 2022 tax returns, we’ll review the income limits for that year. To qualify for the EITC, your 2022 income cannot have exceeded:

$53,057 for single filers or $59,187 for joint filers with three or more qualifying children$49,399 for single filers or $55,529 for joint filers with two qualifying children$43,492 for single filers or $49,622 for joint filers with one qualifying child$16,480 for single filers or $22,610 for joint filers with no qualifying children

Your investment income for 2022 must also be $10,300 or less to qualify for the EITC.

Meanwhile, the maximum value of the EITC for 2022 is:

$560 for no qualifying children$3,733 for one qualifying child$6,164 for two qualifying children$6,935 for three or more qualifying children

What could extra money do for you?

In 2022, 31 million eligible workers and families received about $64 billion from the EITC, reports the IRS. If you’re struggling to cover your bills in the face of inflation, and many people are these days, then you really don’t want to pass up the chance to get money back from the IRS.

An estimated one out of every five filers who’s eligible for the EITC does not claim the credit, and that’s really a shame. So if you’re a lower or even a moderate earner, it pays to look into the EITC and see if you qualify for it.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More