Earned Income Tax Credit (EITC): see if you qualify for the program
Everything you need to know to benefit from the Earned Income Tax Credit (EITC), the American pension program that refunds part of the income tax paid in the previous year.
by José Gonçalo
Earned Income Tax Credit (EITC): get back the taxes you pay annually to the government
In fact, every year, the United States of America collects about $1.932 trillion in income taxes alone. Each person pays the government an average of 10% to 37% of all annual earnings. Now think: what if it were possible to get back the amounts you pay? Featured like the Earned Income Tax Credit (EITC), it’s possible!
The EITC is one of the federally funded social assistance programs that have lifted many families out of poverty. Can you also get your tax back? Read this article and find out.
What is the Earned Income Tax Credit (EITC)?
One program that guarantees tax refunds for families in need is the Earned Income Tax Credit. The EITC is an initiative that is part of the package of assistance programs offered by the federal government.
Basically, this program guarantees an increase in the income of families below the poverty line by “returning” part of the income tax paid in the previous year. Payment is made annually in a single installment deposited, in most cases, on March 1.
The EITC improves the quality of life for more than 20 million families by providing incomes above the poverty line. On average, each family earns about $3,000. However, this is not a fixed value.
This payment can be higher or lower, it will depend on your income and the number of people that make up your family nucleus. In some cases, the amount returned is even greater than the income tax paid by a family.
In addition, another objective of this program is to encourage and reward workers. Thus, every dollar earned increases the amount paid by the EITC. In this way, people are encouraged to be employed and work longer hours.
There is a maximum refund limit that a family can receive. In fact, this limit becomes higher according to the number of children a family has. Thus, a family with three children or more can earn up to US$6,557 in 2019.
The amount increases according to the family’s income. If a family’s income exceeds an income of approximately $25,000, the EITC value becomes less. From that amount, the refund decreases to zero for income equal to or less than $57,414.
Supplemental Security Income (SSI): find out how the program works
Supplemental Security Income (SSI) is one of the programs that generate a better quality of life for people in need. Learn all about it here!
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Who is eligible for the Earned Income Tax Credit program?
There are some basic criteria that define whether or not you are eligible for the EITC. Likewise, these conditions will also influence the amount you receive. Basically, to apply for this program, you must meet the following criteria:
- Have worked in the previous year and earned a monthly income of less than $57,414 (which is less than $4,600 per month);
- If you have investments (stocks and the like), the income generated by them in the previous year cannot exceed US$10,000;
- Possess a valid Social Security Number;
- Not having any type of foreign income under Form 2555.
If you are a member of the armed forces, clergy, or contributing family members with a disability, you may also be eligible for this program.
However, these categories have special conditions, and membership in the EITC may affect your income in other wellness programs. Therefore, it is important to review these conditions before applying to the program.
How to claim the EITC on your taxes?
The process to request a refund from the EITC is simple and can be done completely online. Basically, what you need to do is fill in the available forms for tax return. Check out these documents below:
- Form 1040 (Individual Income Tax Declaration Document);
- Form 1040-RS (Income Tax Return Document for Over 65s);
- EIC schedule (statement if you have eligible children: under 19, disabled).
In order for you to receive your benefit faster, we advise you to submit your complete documentation online. In fact, the Internal Revenue Service (IRS) has a service through which you can submit these papers for free.
To access it, just search the E-File for your return for free service on the Federal Revenue’s official website. In addition, the IRS still offers a mobile application.
Through it, you can get updates on the status of your refund and know when it will be available in your account. In addition, this application offers important information and indicates licensed companies that can help you file your income tax.
To access it, just search for the IRS2Go in your device’s app store.
What are the benefits of the EITC for taxpayers and their families?
In fact, the biggest benefit of the Earned Income Tax Credit is that it gives families in need the opportunity to earn a better income. So this has an extremely positive effect.
Studies indicate that the majority of families receiving this benefit use it for home improvement, car repair, bill payment or study funding.
In fact, a considerable number of families stopped having an income below the poverty line through this benefit. Also, you can choose how you want to receive your payment.
In fact, you can choose to receive the amount as a direct deposit into your checking account. However, it is possible to refund this amount in the form of tax credits.
Additionally, research reports that many people felt more motivated to find a job or work longer hours because of this benefit. Of course, this is due to the way the program was designed.
Finally, there are other programs you may be eligible for! Click on the link below and read the full review of another program that guarantees great benefits to the American people, the SNAP.
Supplemental Nutrition Assistance Program (SNAP): understand how it works
Know the Supplemental Nutrition Assistance Program (SNAP), the federal program that can guarantee quality food for your family.
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