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An Important Message for Employers with Low to Moderate Income Employees.

Feb 1, 2022 | Human Resources

If you have employees who earn less than $57,414, they may be eligible for the Earned Income Tax Credit (EITC).  The EITC helps low- to moderate-income workers and families get a tax break.  If an employee qualifies, they can use the credit to reduce the taxes they owe – and possibly increase their refund.

For more than 45 years, the EITC has made life better for American workers and their families, but there is still approximately 20 percent of eligible taxpayers who do not claim the credit.  It is important that we remind families and workers about EITC.

Please share the Publication 962, “Life’s a little easier with EITC”, with your eligible employees.

In addition to the document, you can share the following with your employees:

How Much is the EITC?

This year, taxpayers can receive up to $6,728 if they claim qualifying children or up to $1,502 if they don’t claim qualifying children.  The amount of the credit depends on:

  • relationship status (single or married)
  • number of qualifying children/dependents
  • annual income.

Who Qualifies for the EITC?

Employees may claim the EITC if their income is low- to moderate.  The amount of their credit may change if they have children, dependents, are disabled or meet other criteria.  More information about eligibility can be found within the Publication 962 here.

 

How to Claim the EITC.

Form 1040, US Individual Income Tax Return or Form 1040 SR, U.S. Tax Return for Seniors must be filed.

For those with qualifying children, the Schedule EIC (Form 1040 or 1040-SR), Earned Income Credit must be filed as well.

If the  EITC needs to be claimed for prior years, eligible taxpayers have three years to file and claim a refund from the due date of their tax return.  The EITC can still be claimed for:

  • 2020 if the tax return is filed by May 17, 2024
  • 2019 if the tax return is filed by July 15, 2023
  • 2018 if the tax return is filed by April 18, 2022

 

To file a prior year tax return, complete and file Form 1040 and a Schedule EIC, if there are qualifying children.

If a tax return was already filed in the prior year, but the EITC was claimed, an amended return can be filed.