Don't Mess With Taxes

The Earned Income Tax Credit (EITC) turns 50 this year. The official date is March 29, in case you want to throw a party.

The Internal Revenue Service isn’t waiting that long.

With tax season 2025 underway, the tax agency again is celebrating this tax benefit created to help lower- and moderate-income workers with the annual Jan. 31 EITC Day. Today marks the beginning of efforts to get the word out to eligible taxpayers and encourage them to take advantage of the EITC.

The EITC can be worth from hundreds to thousands of dollars for qualifying filers. While the larger tax savings go to families, single taxpayers are eligible, too. The maximum EITC amounts for the 2024 tax year are —

• $632 for filers with no qualifying children;
• $4,213 for taxpayers with one qualifying child; :
• $6,960 for filers with two qualifying children; and
• $7,830 for taxpayers with three or more qualifying children.

These credit amounts are adjusted annually for inflation. You can get a preview of the 2025 amounts in the ol’ blog’s inflation series post Tax-reducing deductions, credits, and income exclusions get inflation bumps in 2025.

As of December 2024, approximately 23 million workers and families had received about $64 billion total from the EITC, according to IRS data. On average, eligible taxpayers received $2,743 from the credit in tax year 2023.

20 percent of filers miss out: The EITC is one of the best tax breaks. It is a tax credit, which means it offsets dollar-for-dollar any tax an individual owes.

Even better, the EITC is refundable. If you have some EITC left over after it wipes out your tax bill, or don’t owe any tax, you get the remaining EITC money as a refund.

But this great tax benefit is not enough to get every EITC eligible taxpayer to claim it. The IRS estimates that roughly one in five eligible taxpayers miss out on claiming the EITC.

Part of the reason the tax credit is ignored or overlooked is that it is rather complicated to claim. You must make money through wages to claim it, but not too much. If you have children, they must meet EITC eligibility requirements. There also are age limits.

Many of those who might be able to benefit from the EITC can’t afford to hire a tax professional to help them maneuver the tax credit’s intricacies. Even tax software can be confusing.

EITC scams create added claim problems: And that creates another problem. Tax scammers and disreputable tax preparers target filers that might indeed be eligible for the EITC.

But these bad tax actors push the EITC limits, or even enter false information on clients’ tax returns, in order to claim a large tax credit amount, a part of which the crooks get.

To guard against such false EITC claims, the IRS is prevented by law from issuing any refund that is from a tax return on which the EITC (or the Additional Child Tax Credit) is claimed until mid-February. The added time is to give the IRS longer to check into such claims and catch the fraudulent ones.

That means that these filers won’t get their refunds until Feb. 22 at the earliest. And that’s if the refunds are directly deposited.

That refund delay also is a reason, albeit a small one, some folks forgo the EITC claim. They want their smaller refund as soon as possible, rather than wait a few more weeks for more money.

Whatever the reason for ignoring the EITC, the IRS has been conducting EITC Awareness Day each Jan. 31 for the last 19 years to educate taxpayers and encourage those eligible to claim the tax break.

Community organizations, elected officials, state and local governments, schools, employers, and media outlets (including tax blogs!) use this day to help reach workers eligible for the credit.

Who qualifies for EITC: EITC awareness efforts point out that this tax credit is for working taxpayers. That means, they must have earned income from jobs.

But as noted earlier, there also are income limits.

For 2024 tax year claims, workers can claim the EITC if their income did not exceed the following limits:

Workers also must:

• Be a U.S. citizen or resident alien all year.
• File a tax return even if their income level doesn’t usually require them to file.
• Have a valid Social Security number (SSN) for themselves, as well as for their spouse, if filing a joint return, and for each qualifying dependent claimed for the EITC.
• File a return without Form 2555, Foreign Earned Income.

In addition, if you don't have a qualifying child, to claim the EITC you must:

• be age 25 but under 65 at the end of the year,
• not qualify as a dependent of another person, and
• live in the United States for more than half of the year.

Married but separated spouses who do not file a joint return may qualify for the EITC if they meet certain requirements.

There also are special rules for military personnel, clergy and ministers, as well as for taxpayers with certain types of disability income or a child who is disabled.

And new this filing season, when it comes to dependents being claimed on different returns, the IRS says it will accept an e-filed return even if a dependent has already been claimed on a separate, previously filed return as long as the primary taxpayer on the second return includes a valid identity protection personal identification number (IP PIN). In previous years, the second tax return had to be filed by paper.

Claiming the EITC: As the above rules show, claiming the EITC isn't just a simple filing of Schedule EIC with Form 1040. That’s why National Taxpayer Advocate Erin M. Collins in her latest report to Congress called for, among other things, streamlining the EITC.

But until that happens, the IRS recommends starting with IRS.gov’s EITC Assistant. The online tool will let you check eligibility, which may be affected by changes in marital, parental, or financial status.

You also can visit the IRS’ child-related tax benefits comparison page to learn more about basic eligibility rules for the EITC and several other tax credits.

If you still need help filing for the EITC, the IRS suggests several free options. They include —

• Free File, back this filing season for those with eight participating software companies offering services to taxpayers whose adjusted gross income is $84,000 or less;
• Direct File, available to qualifying filers who live in one of the 25 states participating in the program, and
• Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) community sites available through community organizations across the nation.

And there is, of course, hiring a reputable tax professional who meets your tax and budget needs.

Even though claiming the EITC is more work, sometimes a lot more, at least give it a look if you’re in the income ranges cited earlier. Don’t let Uncle Sam keep money that you can claim.

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