Millions more people without children are now eligible for a tax credit that could save them thousands
- The Earned Income Tax Credit is now available to people who are at least 19 years old.
- Depending on one's income and number of children, filers can save up to $6,935.
Millions of additional low and middle-income people will be holding onto more cash this year, as long as they remember to fill out the right form come tax season.
The Internal Revenue Service (IRS) expanded the criteria to qualify for the Earned Income Tax Credit (EITC) this year, giving a permanent green light to those who are at least 19 years of age without children, as well as 18-year-olds recently out of foster care or facing homelessness.
Before this year's round of changes, the EITC was only available to parents, childless people between the ages of 25 and 64, and older and younger Americans with dependents.
The IRS change reflects the federal government's ongoing expansions of the EITC to help more Americans struggling financially during the pandemic, with President Joe Biden changing it last year under the American Rescue Plan Act, granting temporary eligibility to all filers over 18 without kids, a change that's now permanent. People filing for an EITC can claim up to nearly $7,000 in credits.
"There are important changes to EITC that will help this credit reach more hard-working families this year," IRS Commissioner Chuck Rettig said in a statement. "We urge people potentially eligible for this valuable credit to review the guidelines; many people each year overlook this and leave money on the table."
Tax credit targets benefits gap for low-income people without kids
The EITC has historically existed as a tax break for low- to moderate-income workers, with credits ranging between $560 and $6,935 for 2022. The exact amount someone receives will depend on their income and filing status.
Until this year, having children was an additional qualifier. The American Rescue Plan introduced a temporary lift on the child requirement, roughly tripling the maximum credit for childless workers from $538 to $1,502 last year, as well as extending eligibility to childless Americans under age 25 and over age 65.
The income eligibility requirement still depends on how many children a given filer has. Filers with no children, for instance, must have incomes less than $21,430 to qualify, or $27,380 if filing jointly. The most a given household can make while still being eligible for the credit is $57,414, the cap for a married couple filing jointly with three or more children.
The less one earns, the greater their EITC. Because it's a refundable tax credit, lower-income taxpayers who have little (or no) income-tax liability can receive the total amount of the credit as a tax refund anyway.
Filers whose refunds are partially or fully based on the EITC will receive their money after mid-February, a timeline that the IRS requires to screen for fraud, Sallie Mullins Thompson, a certified financial planner, told Insider's Jean Fogler in December.
The expansion of the EITC will provide extra help to low-income households without children, a demographic that is typically overlooked by federal assistance programs. Temporary Assistance for Needy Families (TANF) for instance, primarily serves families with children. Its money goes to general assistance programs, which support a broader population including non-parents, in just 25 states. Benefits in those states for workers without children came to less than half a million people in December 2019, according to the Center on Budget and Policy Priorities (CBPP). Most of those programs are limited to people with disabilities or health conditions, the CBPP writes.
Additionally, rental assistance programs prioritize people with disabilities and seniors, the CBPP says, and as 12 states have not implemented the Affordable Care Act's Medicaid expansion, childless, low-income adults often lack health insurance. That makes the EITC a rare chance for relief, especially as the childless older adult population grows.