Taxpayers may qualify for significant tax benefit
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IR-2020-22, January 28, 2020
WASHINGTON − The Internal Revenue Service and its partners nationwide remind taxpayers about the Earned Income Tax Credit on January 31, "EITC Awareness Day." This is the 14th year of the EITC awareness campaign that alerts millions of workers to this significant tax credit.
"The EITC is a vital tax credit that helps millions of hard-working working families around the nation," said IRS Commissioner Chuck Rettig. "It's critical that people review the credit to see if they qualify. Increasing awareness about the EITC is important, and the IRS is proud to support the ongoing efforts by partner groups across the country for sharing this critical information with taxpayers."
There are outreach events and activities scheduled to promote EITC awareness around the country. The EITC is the federal government's largest refundable federal income tax credit for low- to moderate-income workers. It can give taxpayers a refund even if they owe no tax.
The IRS estimates four of five eligible taxpayers claim and get the EITC. Nationwide in 2019, 25 million taxpayers received over $61 billion in EITC. The average EITC amount received was $2,504. The EITC is as much as $6,557 for a family with children or up to $529 for taxpayers who do not have a qualifying child.
Taxpayers earning $55,952 or less can see if they qualify using the EITC Assistant tool at IRS.gov/eitc. The EITC Assistant, available in English and Spanish, helps users determine if they are eligible and if they have a qualifying child or children, and it estimates the amount of the EITC they may get. If an individual doesn't qualify for the EITC, the Assistant explains why.
Workers who can claim the EITC
Workers at risk for overlooking this important credit can include taxpayers:
- Without children
- Living in non-traditional families, such as a grandparent raising a grandchild
- Whose earnings declined or whose marital or parental status changed
- With limited English language skills
- Who are members of the armed forces
- Living in rural areas
- Who are Native Americans
- With disabilities or who provide care for a disabled dependent
How to claim the EITC
To get the EITC, workers must file a tax return and claim the credit, even if their earnings were below the filing requirement. Free tax preparation help is available online and through volunteer organizations.
Those eligible for the EITC have these options:
- Free File on IRS.gov. Free brand-name tax software is available that leads taxpayers through a question and answer format to help prepare the tax return and claim credits and deductions, if they are eligible. Free File also provides online versions of IRS paper forms, an option called Free File Fillable Forms, best suited for taxpayers comfortable preparing their own returns.
- Free tax preparation sites. EITC-eligible workers can seek free tax preparation at thousands of Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites. To locate the nearest site, use the search tool on IRS.gov, the IRS2Go smartphone application, or call toll-free 800-906-9887. They should be sure to bring along all required documents and information.
- Find a trusted tax professional. The IRS also reminds taxpayers that a trusted tax professional can prepare their tax return and provide helpful information and advice. Tips for choosing a return preparer and details about national tax professional groups are available on IRS.gov. EITC recipients should be careful not to be duped by an unscrupulous return preparer.
The IRS reminds taxpayers to be sure they have valid Social Security numbers (SSN) for themselves, their spouse, if filing a joint return, and for each qualifying child claimed for the EITC. The SSNs must be issued before the due date of the return, including extensions. There are special rules for those in the military or those out of the country.
By law the IRS cannot issue refunds before mid-February for tax returns that claim the EITC or the Additional Child Tax Credit (ACTC). The IRS must hold the entire refund − even the portion not associated with EITC or ACTC. This helps ensure taxpayers receive the refund they deserve and gives the agency more time to detect and prevent errors and fraud.
"Where's My Refund?" on IRS.gov and the IRS2Go app will be updated with projected deposit dates for most early EITC/ACTC refund filers by February 22. So EITC/ACTC filers will not see an update to their refund status for several days after February 15. The IRS expects most EITC or ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March, if they choose direct deposit and there are no other issues with their tax return. Check 'Where's My Refund?' for a personalized refund date.
Taxpayers are responsible for the accuracy of their tax return even if someone else prepares it for them. The EITC rules can be complicated and the IRS urges taxpayers to seek help to make sure they are eligible by visiting a free tax return preparation site, or using Free File software or a paid tax professional. Errors can have lasting impact on future eligibility to claim EITC and leave taxpayers with a penalty.
Taxpayers should be sure to reply promptly to any letter from the IRS requesting additional information about EITC and call the number on the IRS letter if they need assistance or have questions.
Taxpayers who had an EITC claim reduced or denied for any reason other than a mathematical or clerical error must file Form 8862, Information to Claim Certain Credits after Disallowance, to claim the credit.
Beware of scams
Be sure to choose a tax preparer wisely. Beware of scams that claim to increase the EITC refund. Scams that create fictitious qualifying children or inflate income levels to get the maximum EITC could leave taxpayers with a penalty.