Tax season has arrived (and no, it is not the one where you return from vacation). However, we must be aware that you may be eligible for financial assistance from the IRS this tax season.
Yes, as you read, it is a good opportunity to recoup some of your expenses. However, many taxpayers overlook a detail: according to the IRS, one out of every five taxpayers fails to claim a tax credit worth up to $7,830!
The Earned Income Tax Credit (EITC) benefits low-income workers. Despite the IRS’s information campaigns, thousands of people still do not apply, either because they are unaware of the program, are confused, or believe they do not qualify. So, we’re going to shed some light on this credit and explain everything you need to know so that if you qualify, you don’t miss out!
What is the EITC and how does it work?
The Earned Income Tax Credit is a refundable credit, which means that it not only reduces the amount of taxes you owe, but if you owe nothing, you can receive the money directly from the IRS. It is intended for people with low to moderate incomes.
Who can apply?
As previously stated, it is primarily intended for single people or couples who work and earn a modest income, have children (or not), and meet the residency and legal status requirements (being a citizen or resident during the previous fiscal year and having a valid Social Security number). There are some other requirements:
- Earned income below the IRS limit
- Investment income below the IRS threshold
- You cannot file Form 2555 (Foreign Earned Income)
How much money can you receive?
The EITC is based on the taxpayer’s family and personal situation. The amounts last year were as follows (and will likely be the same this year). The best part is that you can get it even if you don’t pay taxes to the government:
- Up to $632 if you have no children
- Up to $4,213 with one child
- Up to $6,960 with two children
- Up to $7,830 if you have three or more children
Why don’t people claim it?
Mostly due to a lack of information. The IRS estimates that 20% of taxpayers who qualify for this payment do not request it because they are unaware of their eligibility (perhaps because they believe they cannot apply if they do not have children, which is false).
In other cases, people file their own taxes and, for fear of making mistakes, choose not to include credits they do not fully understand. However, the IRS has created online tools that will help you determine whether you qualify step by step, and they are available in both English and Spanish.
Unclaimed money
Every year, the government allocates billions of dollars to this program, with a sizable portion going unclaimed. It’s money that could make a big difference for many families, whether it’s for debt repayment, rent coverage, saving, or simply breathing easier. How could someone overlook the opportunity to claim it?
When do you receive the money?
If you file electronically, the deposit can be transferred directly to your bank account, usually after 21 days. However, if you are claiming the EITC, you may need to wait a little longer.
EITC credit payments for this year, 2025, will begin to arrive on February 27, as long as everything is correct and your return is filed on time. However, in general, the payment may take six to twelve weeks.
This is one of the most powerful credits the IRS offers, so do the math, check with the IRS to see if you qualify, and claim what’s yours; you just have to ask for it!
