Never heard of the Earned Income Tax Credit (EITC)? Unfortunately many Americans have not. This has compelled the IRS to declare January 25th “EITC Awareness Day”. The purpose of January 25th being to educate the public about this important credit.
The EITC was originally created in the 1970’s in an attempt to help alleviate poverty. It has been an effective tool in doing so, in several ways. The credit provides an incentive to work because it is calculated based off of earnings.
The EITC percentage increases the more you earn, up to $22,300 of income per year. It then decreases on its way back down to a salary level of $47,162 at which point the EITC is not offered. The maximum credit allowance is $6,431 and the minimum is $519.
However, it has in more recent years been the subject of attack. Critics are frustrated because the credit gives money back to Americans who aren’t currently paying into the system. Many of the qualified recipients of EITC fall below the income level required to file taxes.
With increased EITC awareness, the IRS is finding that some taxpayers may be due credit from previous years. Fortunately, it is possible to go back in time three years to claim a refund. For tax year 2018, refunds can be claimed as far back as 2015. At this point, electronic filing is not available for prior year refunds and paper claims must be submitted.
If you are claiming the EITC credit, there are tax forms that must be filled out to do so. The IRS recommends getting help filing for EITC. Uncertain about forms, whether you are eligible, or need assistance getting caught up from previous years? Our office is here for you this tax season!