The EIC (Earned Income Credit) or EITC (Earned Income Tax Credit) is a refundable tax credit that may be used to decrease taxable income to zero and earn a tax refund.
The IRS adjusts the maximum amount of EITC that may be claimed and income levels against which it is calculated annually based on changes in the cost of living. To claim the credit, you must fulfill certain conditions.
- You need to have a valid Social Security Number
- You should be a US citizen
- Have earnings and fulfill the EITC eligibility requirements
For better clarity, check the EIC table 2021 for the tax update of current year. The EITC is calculated in two ways. You can figure out your credit yourself using the earned income credit worksheet and table, which may be found in the 1040 Instruction Booklet. Or, you may ask the IRS to calculate your credit amount for you if you don’t want to figure it out yourself. To do so, go to line 64a of Form 1040 and write “EIC.”
But do note, if you are married and filing a separate return, if you have investment income of more than $10,000 in 2021 (2021 amount), or if you can be the qualifying child of another taxpayer, you cannot claim the credit. So make sure you fall into all the checks in order to receive your deserved Earned Income Credits.