Tax | Who likes good tax news? All the world! Here’s some good news: You can use last year’s earnings to claim this year’s EITC!
Use your 2019 Earned Income to get a boost
Earned Income Tax Credit (EITC) gives low- and moderate-income workers and families a tax break. If you qualify for the EITC, the government will send you a check in the amount of your EITC, even if you don’t owe taxes. Your income must be below certain limits and meet other requirements to qualify for this credit. When claiming the EITC, you can use your 2019 earnings to claim a higher EITC (the deadline is July 15, 2023)
The “look back” rule is an opportunity for taxpayers to get the most credit possible by allowing them to use their 2019 earned income instead of their 2021 earned income to calculate their EIC or Additional Child Tax Credit (ACTC) on their 2021 tax return. So if your income was reduced in 2021 due to unemployment, pay cuts, etc., using your 2019 earned income can help you get a larger credit.
3 Ways You Can Use the EITC to Add More Money to Your Paycheck
- if you have a job, set aside part of your earned income tax credit in a special account called an HSA (use your tax refund to buy the best health insurance plan you can) to pay for medical expenses without paying taxes on that money.
- If you’re self-employed, you can choose how much of your EITC should be available as a tax refund after you file taxes. It can help reduce the amount of money that is withheld from your paychecks throughout the year.
- Use some or all of your EITC to pay off credit card balances, car payments, or student loans.
Who qualifies for the EITC?
Basic qualifications for the EITC for the tax year 2021 include:
- have worked and earned income below $60,000
- Have investment income below $10,000 in the year 2021
- Have a valid social security number before the due date of your 2021 return (including extensions)
- be the US. citizen or resident foreigner all year
- Failure to file Form 2555 (relating to foreign earned income )
For full eligibility requirements, review the EITC Qualification Wizard.
If you are eligible, you must file a prior year tax return and complete and file Form 1040 (along with a Schedule EITC if you had qualifying children). If you filed a tax return for prior years but did not claim the EITC and were eligible, you must file an amended return.
CWF can help you claim your EITC
Campaign for Working Families (CWF) can make sure those who qualify to get a tax break with the EITC! If you’re a working family or individual in Philadelphia, Montgomery County, or southern New Jersey earning less than $65,000 per year, you can get free professional help at CWF. Additionally, an IRS-certified CWF tax preparer will help take the stress out of taxes and make sure you don’t miss out on the EITC.