The Internal Revenue Service recently announced a unique claim refund opportunity of up to $6,600 for qualified taxpayers. This initiative is expected to benefit individuals and families who did not take the Earned Income Tax Credit (EITC) for the 2020 tax year. The last date to file or amend a 2020 tax return to claim this credit is 14 January 2025.
Understanding Earned Income Tax Credit (EITC):
The EITC is a refundable tax credit to aid low- to moderate-income workers and families. For the tax year 2020, the maximum possible amounts of credit were as follows:
- Without qualifying children: Up to $538
- One qualifying child: Up to $3,584
- Two qualifying children: Up to $5,920
- Three or more qualifying children: Up to $6,660
All of these amounts vary per income, filing status, and number of qualifying children.
Qualifications
The specific qualifying criteria for the EITC for tax year 2020 are as follows:
Income Limits
Adjusted Gross Income (AGI) must be less than:
- For single or head of household filers:
- No children: $15,820
- One child: $41,756
- Two children: $47,440
- Three or more children: $50,594
- For married filing jointly:
- No children: $21,710
- One child: $47,646
- Two children: $53,330
- Three or more children: $56,844
Additional Requirements
You, your spouse (if filing jointly), and any qualifying children must have valid Social Security Numbers. You cannot file as “Married Filing Separately.” Your investment income for 2020 must be $3,650 or less. You must have lived in the U.S. for more than half of 2020.
The Process for Refund Claim
If you qualify for EITC, here are the steps to claim your refund:
Determine your filing requirement. If you did not file a 2020 tax return, you will now need to do so. If you did file a return but had not claimed the EITC, you will need to file an amended return using Form 1040-X.
- Gather necessary documents, W-2s or 1099s, Social Security numbers for all family members, proof of residency for qualifying children.
- Complete Form 1040 for 2020 tax year and attach Schedule EIC for New Filers. Those amending returns should use Form 1040-X and include Schedule EIC if claiming children.
- Mail the completed forms back to the IRS. The IRS does not offer an electronic option for prior-year returns.
- Check the progress of your refund using the IRS “Where’s My Refund?” tool. Such processing times may vary; so check frequently.
Importance of Acting Against Deadline
The strict claim deadline is January 14, 2025. If missed, the taxpayer misses that likely credit because the IRS places a three-year window to claim refunds.
Benefits of Earning Income from Increased Tax Credits
The EITC earns the taxpayer a good deal, especially for families with more than one qualifying child. Relief from added income can pay such basic needs as food, housing, or security for debt repayment or savings.
Proper Usage of Common Errors
Make sure Social Security numbers are correct in the entries. Choose the right filing status according to your 2020 situation. Report all the income accurately, to avoid holding your returns because of processing delays or denial.
Seeking Assistance
If you are not sure whether or not you qualify or need help with filing, the IRS provides all the forms and direction on its website. You can also find a certified tax preparer and take advantage of the Volunteer Income Tax Assistance (VITA) program, which offers free assistance to qualified individuals.
If you do all that upfront and accurately file, this valuable tax credit will be yours-and the refund could prove quite helpful.