IRS issues new earned income tax credit guidance

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The Internal Revenue Service on Wednesday released a series of answers to frequently asked questions about the earned income tax credit.

New EITC FAQ page aims to provide information to eligible taxpayers on how to properly claim the credit when preparing and filing their 2021 tax return.

The EITC helps low-to-moderate income workers and families by providing tax credits to reduce the amount of tax they owe or by providing an additional payment to increase a tax refund. The amount of the credit may vary depending on whether the taxpayer has children, dependents, is disabled or meets other criteria.

The new FAQ explains what the EITC is, how it has been extended for 2021, which taxpayers are eligible and how to claim it. For 2021, more eligible childless workers can benefit from the EITC as the maximum credit has almost tripled for eligible taxpayers and, for the first time, it is available to young workers and now has no limit. age. For 2021, the EITC is generally available to filers without eligible children who are at least 19 years old and whose earned income is less than $21,430, or $27,380 for spouses filing jointly. The maximum EITC for eligible filers without children is $1,502. Another change for 2021 allows individuals to calculate the EITC using their earned income in 2019 if it was greater than their earned income in 2021. In some cases, this option will give them a larger credit.

IRS Headquarters in Washington, D.C.

Andrew Harrer/Bloomberg

The 17 new FAQs include:

  • What is the earned income tax credit?
  • What is earned income?
  • What are the earned income limits for eligible taxpayers without children?
  • How old do I have to be to claim the income tax credit if I don’t have eligible children?
  • Do I need to have a Social Security Number (SSN) to qualify for the Earned Income Tax Credit?
  • Do my eligible children need to have SSNs for me to claim the earned income tax credit?
  • What is the age requirement to claim the earned income tax credit if I have an eligible child?
  • What are the earned income limits for people with an eligible child?
  • Will any refunds I receive for claiming the Earned Income Tax Credit affect my government benefits?
  • What is the maximum earned income tax credit amount for 2021 for eligible taxpayers with no eligible children?
  • Is there a limit to the amount of investment income I can earn and still qualify for the earned income tax credit?
  • If I do not file a joint declaration with my spouse, can I claim the earned income tax credit?
  • Who is considered a qualifying homeless youth for earned income tax credit purposes?
  • Who is considered a qualified ex-foster youth for earned income tax credit purposes?
  • Can I choose to use my earned income in 2019 to calculate my earned income tax credit for 2021?
  • Can a student claim the earned income tax credit for 2021?
  • What is a specified student for earned income tax credit purposes?

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