In 2019, 25 million eligible workers and families received about $63 billion in Earned Income Tax Credit (EITC) payments, a federal tax credit offered to provide hardworking American workers and families with financial assistance.? While the EITC has recently come to the forefront, the EITC program has been benefitting low- and moderate-income workers for 46 years, and continuously undergoes modifications, but remains steadfast in providing the vast majority of benefits to families with children.
Qualifying for the EITC depends on a variety of factors, including your filing status individual or married filing jointly, qualifying children, your age, income sources and amounts, and investment incomes.
In 2020, the IRS has determined that taxpayers must meet these certain adjusted gross income limits in order to claim the EITC for tax year 2020, and provisions are defined for military members, clergy, and qualifying children.
The IRS, in order to preserve the integrity of the EITC program, aims to minimize improper payments, which is defined as taxpayers who claim the EITC when they are not eligible or claim a credit that is larger than what they are entitled to.? The Department of Treasury for Fiscal Year 2019 reported an improper payment rate of 25.3%, which prompts the IRS to conduct an audit program for returns claiming EITC, averaging approximately 300,000 EITC audits per year, with more than 40% of EITC errors originating with the eligibility of a qualifying child.
While the rules around EITC eligibility can be complex, the IRS estimates that approximately 20% of eligible taxpayers do not claim the EITC and they encourage those who are eligible to claim it.? The IRS has a one-page questionnaire, Publication 5334, Do I Qualify for EITC???
The experienced team at Allen Barron, Inc. attends educational forums and online webinars as part of the due diligence regulations, and seeks to share this information with you, our valued customer.? If you are seeking an experienced tax firm to help you with your tax needs we invite you to contact us or call?866-617-3522 for a free consultation.