Everyone on your tax return has to have a valid Social Security number. There are a few other requirements, including: - You can’t have more than $10,300 in investment income. For the 2022 tax year, the income limits range from $16,480 to $59,187, depending on your filing status.

That means if the credit amount is higher than your tax owed, the government will pay you the difference.ĭO YOU QUALIFY? As its name suggests, eligibility for the EITC mostly depends on your income, and you have to have worked to receive the credit. The total value those credits was approximately $64 billion, the IRS said.Įven better, the EITC is what is known as a “refundable” tax credit. The earned income tax credit, or EITC, is one of the most common income tax breaks, designed to help lighten the burden for middle- and lower-income families.įor the 2021 tax year, 4 out of 5 filers claimed this tax credit, with an average benefit upward of $2,000. Before you file your return, here are some tax credits you may want to review. Some tax credits apply to a huge swath of the population, while others are specialized to incentivize specific economic activity. “It’s a full recoupment of taxes you’d otherwise have to pay.” “With a credit, you get a 100% benefit,” says Andrew King, vice president of tax policy and research at Goldman Sachs Ayco Personal Financial Management in Cohoes, New York. The result can mean hundreds of dollars knocked off your bill - or added to your refund. Unlike a deduction, which decreases the income on which you’ll be taxed, a tax credit reduces your overall tax due. A tax credit is among the most satisfying benefits you can turn up when preparing your return.

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