Earned Income Credit is a tax credit for low to moderate-income families who work. The EIC credit is calculated based on your family’s earned income and how many qualifying children you have as well as your filing status. Each qualifying child up to 3 increases the amount of the EIC you are eligible for.
So, you may be asking “How much for one child?” or “How much do you get back per child?”
This amount changes from year to year and there is a sweet spot for your earned income limits that allows you to claim the full credit. This amount ranges from roughly $21,000 to $59,000 for married filing joint and $16,000 to $53,000 for all other filling statuses, and depending on the number of children claimed the credit goes up by totally different amounts. To qualify for the maximum annual credit you need to not exceed the particular income limitation for that specific year.
EIC is refundable, which means that even if you do not pay any taxes in during the year (i.e. zero) and you qualify for EIC, you can still get a big refund. In other words, you can get more back than you paid in. Lastly be careful about not filling jointly if you are married it can cause issues with trying to claim the EIC.
For further information please use the EITC tables provided by the IRS.
In 2021 there were a lot of changes made to the child tax credit (CTC) starting with the amount being raised and removing the earned income requirement. In tax year 2022 things will go back to the old method where the full child tax credit per child is $2,000 and there is an earned income requirement that will award the credit on a gradual scale based on the amount of earned income.
The American opportunity tax credit (AOTC) is a up to $2,500 per year credit for qualified education expenses paid for an eligible student during the first four years of higher education. If the credit brings your total tax liability owed to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded back to you.
The amount of the credit is 100 percent of the first $2,000 of qualified education expenses you paid for each eligible student and 25 percent of the next $2,000 of qualified education expenses you paid for that student, the credit can be claimed a total of 4 times. The education expenses and related expenses for the qualifying student must be paid to an eligible educational institution or for some other recognized education credential. In order to claim AOTC you’ll be provided a type of tuition statement called a 1098-T, bring that when you come in to file your taxes as well as your education expenses.
*Academic Periods may be semesters, trimesters, quarters or any other interval of study such as a summer school session. The academic periods are set by the schools. For schools that use clock or credit hours and do not operate on an academic term schedule, the payment period will suffice as an academic period.
The child and dependent care credit is a tax credit that may help you pay for the cost of raising children and other dependents (qualifying persons). The credit is calculated based on your income and a percentage of expenses that you incur for the care of qualifying persons to enable you to go to work, look for work, or attend school. For 2021, the credit up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons) and potentially refundable, so you might not have to owe taxes to claim the credit (so long as you meet the other requirements).
This means that more taxpayers will be eligible for the credit for the first time and that, for many taxpayers, the amount of the credit will be larger than in prior years.
Finally, if you never got your stimulus then you still have time to apply for it so long as you claim it on your tax return for tax years 2020 and 2021 if you already filled then you can file an amendment with tax form 1040-X to claim additional tax benefits. These EIPs can be claimed for any children or adults on the tax return who have yet to receive them.
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