The earned income tax credit (EITC) has been around since the mid-1970s, and it is arguably one of the best tools that the federal government has to fight poverty. The purpose of the EITC is to reduce the tax burden and to supplement the wages of low-to-moderate income, working families through a refund. Eligible taxpayers can receive a refund when they claim the EITC, even if they have no filing requirement, owe no tax, and had no income tax withheld.
Thanks to the American Rescue Plan Act (ARPA), the EITC was expanded for the 2021 tax year. This means that taxpayers ages 19-24 and over 65 that work may be eligible to receive the EITC even if they don’t have dependents or usually file taxes. Additionally, the maximum credit amount for taxpayers without children was tripled from $538 to $1,502.
The size of the refund depends on the total income reported in a tax return, the number of dependents claimed and if the amount of taxes owed by the taxpayer. Unfortunately, this federal tax credit is not available for hardworking taxpayers with Individual Taxpayer Identification Numbers (ITINs). Workers claiming this credit and their dependents must have a Social Security number (SSN) to receive the credit. All taxpayers and dependents must have valid SSNs by the due date of the return (including extensions) to claim the credit. However, you may qualify for the EITC even if you can’t claim children on your tax return.
To qualify for the EITC this year, you must:
- Have worked and earned income under $57,414, under $27,380 for workers without dependents for 2021.
- Have investment income below $10,000 in the tax year 2021.
- Have a valid SSN by the due date of your 2021 return (including extensions).
- Be a U.S. citizen or a resident alien all year.
- Not file Form 2555 (related to foreign earned income).
These are the income requirements for the EITC for the 2021 tax year
|Children or Relatives Claimed||Maximum Adjusted Gross Income||Maximum Adjusted Gross Income|
|(Filing as Single, Head of Household, Widowed or Married Filing Separately*)||(Filing as Married Filing Jointly)|
Maximum Credit Amounts
The maximum amount of credit you can claim:
- No qualifying children: $1,502
- 1 qualifying child: $3,618
- 2 qualifying children: $5,980
- 3 or more qualifying children: $6,728
Be advised that while ITIN holders may not be eligible for the federal EITC, many states have been recently expanded eligibility for their local EITC to immigrant workers with ITINs. If you live in California, Colorado, Maine, Maryland, New Mexico, or Puerto Rico you might be eligible for the local EITC.
To learn more about the EITC and how to promote it in your community, here are a couple of resources to help you get started: