What’s New this Year for the EITC—Possibly More Money for You!
By Teon Dolby
Tax anxiety is real. As a young person still learning how to navigate the “adulting” world, I can attest that filing taxes is an uncomfortable experience. I fear I may not understand concepts, or there is a chance I may owe money. Thankfully, I learned tax season could provide young adults with refundable credits such as the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), American Opportunity Tax Credit (AOTC), and Child and Dependent Care Tax Credit (CDCTC). People who didn’t receive the third COVID stimulus payment can also get it by filing their 2021 taxes. Please visit Get It Back for resources on eligibility and how these tax credits can help maximize your tax refund.
This year, workers without children in their homes can benefit even more from the EITC, because the American Rescue Plan temporarily expanded the EITC for workers with no “qualifying children.” Today as the IRS celebrates the 16th annual EITC Awareness Day, here are some essential facts to know about the new temporary expansions to the EITC for the 2021 tax year.
- 1. The maximum credit available to workers without qualifying children is $1,502. The increased credit amount can help recipients build financial security by allowing them to put money into savings or pay down debt.
- 2. The ARP expansion lowered the age of eligibility for the EITC for workers without children in their home to 19 and removed the upper age limit, making workers without qualifying children who are 65 and older eligible. For youth who are homeless and youth aging out of the foster care system, the eligibility age is 18. For students attending school at least part time, the eligibility age remains 24.
- 3. Young workers without qualifying children must file their taxes to receive the temporarily expanded EITC. For free assistance from IRS-certified volunteers who can accurately file your taxes for free, please visit Volunteer Income Tax Assistance (VITA) or, starting January 31, Get Your Refund. If you have income above $12,550 you are required to file a return by April 18, 2022 (or request an extension); workers with incomes below the filing threshold don’t have a deadline but will get their refund sooner by filing early.
- 4. You must have a valid Social Security number to receive the federal EITC. If you’re filing as a married person, your spouse must also have a valid Social Security number to be eligible for the credit. You can’t file as “married filing separately.” You do not have to be a citizen to claim the federal EITC if you have a Social Security number. See DACA status for more information. Six states allow filers to use their Individual Taxpayer Identification Numbers (ITIN) for state EITC eligibility.
- 5. Youth experiencing homelessness and former foster youth are eligible for the EITC at age 18 even if they attend school. A qualified foster youth is a person who was in foster care at age 14 or later. Youth experiencing homelessness are defined as individuals who lack a fixed, regular, and adequate nighttime residence. These individuals can be eligible for the EITC starting at age 18 but face unique barriers when filing taxes and may need targeted support.
- 6. You must have earned income to be eligible for the EITC. Workers without qualifying children who have earnings of $9,820 to $11,610 ($17,550 for married taxpayers filing jointly) will receive the maximum credit in 2021. The credit phases out as income increase above that level, reaching zero at $21,430 ($27,380 for married filing jointly). Unemployment benefits, Social Security, Supplemental Security Income, and pension payments do not count as earnings, but net earnings from self-employment do.
- 7. Max your credit by using either your 2019 income or 2021 income to calculate your EITC. The American Rescue Plan includes a provision to help workers who have lost their jobs. So even if you had no earnings in 2021, you might still be able to get the credit based on your 2019 income. Choose whichever year is going to get you a bigger refund.
You’ve worked hard all year. Finally, it’s time to reap the benefits. The EITC’s temporary expansion will boost income for 17 million young workers not raising children in the household. Even if filing taxes is not in your comfort zone, please don’t let your tax benefits go unclaimed—and make sure you get the payment you have earned!