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There are very few tax breaks available for low-income adults who don’t have children. Thankfully, some important changes were made to the Earned Income Tax Credit (EITC) last year, making this vital tax benefit available to many more Americans.
Wondering if you might qualify to claim this fully refundable tax credit in 2021? Read on to find out!
What is the Earned Income Tax Credit?
The EITC is a refundable tax credit for individuals and families with low to moderate incomes. Beginning in tax year 2021, this credit has expanded to working adults age 19 or older (including seniors 65 and older), regardless of whether or not they have children.
Previously, this tax credit was available to individuals aged 25-64 without dependents. The new rules for tax year 2021 allow more childless people to qualify for the credit.
How much is the EITC?
The Earned Income Credit amount was temporarily expanded for 2021, allowing qualified childless taxpayers to claim a credit of up to $1,502 on their federal income tax returns. In 2022, the maximum credit will drop to $560 for qualified childless taxpayers.
The amount you receive depends on your adjusted gross income (AGI), tax filing status, and how many kids you have.
The nice thing about the EITC is that it’s fully refundable. If the credit amount you qualify for is more than the amount of tax you owe, you’ll receive the difference as a tax refund.
What are the income limits for the EITC?
Use your adjusted gross income, marital status, and the number of kids you have to determine how much of the Earned Income Credit you could qualify for in 2021.
| Number of Children | 0 | 1 | 2 | 3+ |
| Max Earned Income Credit | $1,502 | $3,618 | $5,980 | $6,728 |
| Max Income (single or head of household) | $21,430 | $42,158 | $47,915 | $51,464 |
| Max Income (married filing jointly) | $27,380 | $48,108 | $53,865 | $57,414 |
Note: Both your earned income (wages, tips, and net self-employment income) and your AGI (your gross income minus any adjustments) must both be under the thresholds listed in this table.
As you can see from the table above, the most one household can make while still retaining eligibility for the Earned Income Credit is $57,414 — that is for joint married filers with three or more kids. Meanwhile, the most you could earn as a single filer without children to claim the credit is $21,430.
I received stimulus money or advance Child Tax Credit payments last year. Do those count as income for the EITC?
No, any stimulus payments or advance Child Tax Credit payments you received last year are not counted for income purposes when claiming the Earned Income Tax Credit.
Additional requirements to claim the EITC
If you meet the IRS income requirements, you just need to make sure you also meet the following conditions to qualify for the Earned Income Credit:
- You need to have lived in the United States for more than half of 2021
- You cannot be claimed as a dependent or qualifying child on someone else’s tax return
There is not a maximum age limit to claim this tax credit, but you must meet the following minimum age requirements depending on your situation:
- You must be at least 24 if you were a student for at least five months in 2021
- You must be at least 18 if you were in foster care any time after turning 14 or qualify as a homeless youth
- You must be at least 19 in all other circumstances
Changes to investment income and married filing separately requirements
There are a few more EITC changes you should know about for 2021 and beyond. For instance, the IRS increased its limit for investment income — you can now qualify for the Earned Income Credit if your investment income does not exceed $10,000.
In the past, if you were married, you had to file with your spouse to claim the EITC. Starting in 2021, if you are married but separate, you do not have to file a joint return to qualify for the Earned Income Credit as long as you lived with your qualifying child for more than half the year. You must also meet one of the following requirements:
- You did not live with your spouse for at least the last six months of 2021; or
- you are legally separated under your state’s laws with either a written separation agreement or a decree of separate maintenance and weren’t living with your spouse at the end of 2021
Claiming the Earned Income Credit for 2021
TaxAct® makes it easy to claim the Earned Income Tax Credit on your return. Our step-by-step process guides you through your federal and state returns at a pace that’s right for you and gives you helpful suggestions tailored to your unique tax situation. Try it out and see for yourself!