- The Earned Income Tax Credit is now available to people over the age of 19.
- Filers can save up to $6,935 depending on their income and number of children.
- The EITC is a rare respite for low-income childless adults, who are frequently excluded from government assistance programmes.
Millions more low- and middle-income people will have more cash this year, as long as they remember to fill out the proper forms come tax season.
This year, the Internal Revenue Service (IRS) broadened the eligibility criteria for the Earned Income Tax Credit (EITC), giving a permanent green light to those who are at least 19 years old and do not have children, as well as 18-year-olds who have recently aged out of foster care or are homeless.
Prior to this year’s changes, the EITC was only available to parents, childless people aged 25 to 64, and older and younger Americans with dependents.
The IRS change reflects the federal government’s ongoing expansions of the EITC to assist more Americans struggling financially during the pandemic, with President Joe Biden changing it last year under the American Rescue Plan Act, granting temporary eligibility to all filers over the age of 18 without children, a change that is now permanent. People who file for an EITC can claim up to $7,000 in credits.
“There are significant changes to the EITC that will help this credit reach more hardworking families this year,” said IRS Commissioner Chuck Rettig in a statement. “We encourage people who may be eligible for this valuable credit to review the guidelines; many people each year overlook this and lose money.”
The tax credit is intended to close the benefits gap for low-income people who do not have children.
The EITC has historically been a tax break for low- to moderate-income workers, with credits ranging from $560 to $6,935 in 2022. The amount a person receives is determined by their income and filing status.
Having children was an additional qualifier until this year. Last year, the American Rescue Plan temporarily lifted the child requirement, roughly tripling the maximum credit for childless workers from $538 to $1,502, as well as extending eligibility to childless Americans under the age of 25 and over the age of 65.
The income eligibility requirement is still determined by the number of children a given filer has. Filers without children, for example, must have an income of less than $21,430, or $27,380 if filing jointly. The maximum amount a given household can earn while still being eligible for the credit is $57,414, which is the limit for a married couple filing jointly with three or more children.
The greater one’s EITC, the lower one’s income. Because it is a refundable tax credit, lower-income taxpayers with little (or no) income tax liability can receive the entire credit as a tax refund.
Filers whose refunds are partially or entirely based on the EITC will receive their money after mid-February, according to Sallie Mullins Thompson, a certified financial planner, who told Insider’s Jean Fogler in December.
The EITC expansion will provide additional assistance to low-income households without children, a demographic that is frequently overlooked by federal assistance programmes. For example, Temporary Assistance for Needy Families (TANF) primarily serves families with children. Its funds are directed to general assistance programmes that serve a broader population, including non-parents, in only 25 states. According to the Center on Budget and Policy Priorities, benefits for workers without children in those states totaled less than half a million people in December 2019. (CBPP). According to the CBPP, the majority of these programmes are only available to people with disabilities or health conditions.
Furthermore, according to the CBPP, rental assistance programmes prioritise people with disabilities and seniors, and because 12 states have not implemented the Affordable Care Act’s Medicaid expansion, childless, low-income adults frequently lack health insurance. As a result, the EITC is a rare opportunity for relief, especially as the number of childless older adults grows.