Newsbreak: Millions at Risk of Missing Out on Tax Break as Earned Income Tax Credit (EITC) Changes for 2022!

Millions of Americans may miss out on the Earned Income Tax Credit (EITC) this year, as the pandemic-related enhancements that increased the tax break’s eligibility expired for the 2022 tax year. According to a report released by Yahoo on January 28, 2023, the expiration of these enhancements could result in many Americans not claiming the credit or qualifying for a much smaller amount, which historically happens to 1 in 5 eligible Americans. IRS Acting Commissioner Doug O’Donnell urges people to review this important credit and ensure they are not missing out, as reported by the IRS on February 27, 2023.

Last year, the American Rescue Act expanded the EITC, allowing 18–24-year-olds to qualify with no age limit cap. It made the credit fully refundable and tripled the credit amount for workers without qualifying children, benefiting more than 17 million people. However, these changes are no longer in effect, and to qualify for EITC this year, individuals must be aged 25–64, according to the IRS.

The maximum EITC for single filers with no children Is $560 this year, compared to the maximum pandemic-era credit of $1,500 last year, The IRS added.  To qualify, individuals must have earned income and meet specific adjusted gross income and credit limits for the current, previous, and upcoming tax years.  Earned income includes wages, salary, tips, self-employment, and side hustle work, while unemployment benefits, alimony, and pensions are not considered earned income.

Taxpayers should take advantage of free tax-filing services offered by VITA and the IRS for eligible individuals, especially if their refund is partially based on the EITC or the Additional Child Tax Credit. They should also electronically file and use direct deposit to prevent delays.

Notebook with child tax credit sign on a table. Business concept.