The Earned Income Tax Credit (EITC) is a benefit for working people with low to moderate income. To qualify, you must meet certain requirements and file a tax return even if you do not owe any tax or are not required to file. EITC reduces the amount of tax you owe and may give you a refund. Determine if you’re eligible by using the IRS EITC Assistant tool.

EITC Income Limits, Maximum Credit Amounts and Tax Law Updates

Investment Income Limit must be $3,500 or less for the year. The EITC low-to-moderate income threshold for FY 2020, Tax Year 2019, is $56,000. The threshold is based on tax year 2019 EITC AGI limits as shown below.

Earned income and adjusted gross income (AGI) must each be less than:

• $50,162 ($55,952 if Married Filing Jointly) with three or more qualifying children

• $46,703 ($52,493 if Married Filing Jointly) with two qualifying children

• $41,094 ($46,884 if Married Filing Jointly) with one qualifying child

• $15,570 ($21,370 if Married Filing Jointly) with no qualifying child

The maximum EITC for 2019:

• $6,557 with three or more qualifying children

• $5,828 with two qualifying children

• $3,526 with one qualifying child

• $529 with no qualifying child


The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act)

Enacted on December 18, 2015. The PATH Act contains several changes to the tax law that affect individuals, families, businesses and help safeguard against tax fraud.

Possible Refund Delay for Some Early Filers:

The PATH Act mandates that the IRS not issue a refund on tax returns claiming the Earned Income Tax Credit or Additional Child Tax Credit until Feb. 15. The additional time helps the IRS stop fraudulent refunds from being issued to identity thieves and fraudulent claims with fabricated wages and withholdings.

More information about this law is available on this information page.

Employers can Take Advantage of Expanded Work Opportunity Tax Credit:

The Work Opportunity Tax Credit (WOTC) is a credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. The PATH Act retroactively extended the WOTC for nine categories of workers hired on or after Jan. 1, 2015. It also added a tenth category for long-term unemployment recipients hired on or after Jan. 1, 2016.

Other requirements and further details can be found in the instructions to Form 8850, Notice 2016-22 and Notice 2016-40, available on IRS.gov.

Guidelines on How to Claim New Wrongful-incarceration Exclusion:

The PATH Act includes new wrongful-incarceration exclusion. This legislation provides a special one-year window during which an eligible wrongfully-incarcerated individual can file a refund claim based on any civil damages, restitution or other monetary award received and reported in a prior tax year, even if the normal statute of limitations had already expired for that year. The guidelines are contained in a set of frequently-asked questions, posted on IRS.gov.

ITIN Changes and Renewals:

The PATH Act provisions related to the Individual Taxpayer Identification Number (ITIN) program require some taxpayers to renew their ITINs beginning in October 2016. ITINs that have not been used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return unless renewed by the taxpayer. Taxpayers using an expired ITIN could face a refund delay and may be ineligible for certain tax credits. These provisions, along with new procedures to help taxpayers navigate these changes, are outlined in IRS Notice 2016-48, and on IRS.gov


EITC FAQ

Sources: www.irs.gov and www.eitc.irs.gov