According to recent IRS news, millions of Americans may be eligible for tax credits totaling more than $12,000. As tax season begins, many Americans are looking for strategies to maximize their returns.
The Earned Income Tax Credit (EITC), a federal benefit designed to assist low- and moderate-income workers, is one particularly noteworthy opportunity. Depending on the size of your family and your income, the EITC may provide significant financial assistance.
The IRS validated $12,000 in tax credits for Americans if they are on the following list
The Earned Income Tax Credit (EITC) is a tax break for families and workers with low to moderate incomes. Your refund may increase if you are eligible to use the credit to reduce your tax liability.
In other words, the Earned Income Tax Credit (EITC) is a refundable tax credit intended to reduce the tax burden for qualified workers. The maximum credit amounts for the tax year 2024 are as follows:
- No qualifying children: Up to $632
- One qualifying child: Up to $4,213
- Two qualifying children: Up to $6,960
- Three or more qualifying children: Up to $7,830
To be eligible, your adjusted gross income (AGI) and earned income must fall below specific thresholds. The AGI limit for married couples filing jointly is $66,819, while the AGI limit for a single filer with three or more qualifying children is $59,899 or lower.
Your investment income should also not exceed $11,600. Some jurisdictions offer credits in addition to the federal EITC, assisting Americans even more. For example, California provides the Young Child Tax Credit (YCTC) and the California Earned Income Tax Credit. Regarding the 2024 fiscal year:
- Individuals with incomes up to $31,950 are eligible for the CalEITC.
- YCTC provides up to $1,154 to CalEITC-eligible parents with children under six.
It is important to highlight that an eligible California family may receive up to $12,628 in credits overall when paired with the federal EITC. To find out if you qualify for these credits, take into account the following:
- Income limits: Make sure your AGI and earned income fall below the designated levels.
- Income from investments must not exceed $11,600.
- If you, your spouse, and any eligible children are filing jointly, you must have a valid Social Security number.
- Citizenship: For the tax year, you must be a resident alien or citizen of the United States.
- Status of filing: To be eligible, married Americans must file jointly.
Individuals with certain types of disability income, clergy, and members of the armed forces are subject to additional regulations. Keep in mind that even if your income falls below the filing threshold, you must still file a tax return to take advantage of these benefits.
If you choose direct deposit and electronic filing options, your refund will be processed more quickly. The IRS provides resources to help you determine your eligibility, such as the EITC Assistant. Every year, a large sum of money is lost because many taxpayers fail to take advantage of these valuable credits.
Some Americans could receive up to $7,830 in tax credit
Low-wage workers, who often struggle to support their families on limited incomes, may benefit financially by claiming the earned income tax credit on their tax returns. Strangely, many Americans are unaware of a credit that frequently increases their tax refund.
Perhaps they gave birth in 2024 and have a low-paying job. A person with a low income and one eligible child may be eligible for a federal earned income credit of up to $4,213.
Or perhaps they lost a well-paying job and are now working odd jobs to make ends meet. For example, if their income is low enough, a childless individual may be eligible for the federal earned income tax credit of up to $632 on their 2024 federal income tax return.
Because life happens, you may become eligible for a tax credit for one year after not previously being eligible. According to the Internal Revenue Service, approximately one-third of Americans who qualify for the Earned Income Tax Credit (EITC) for the first time in their lives can claim the credit due to changes in their financial, marital, or parenting circumstances.
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