Many taxpayers are eligible for credits that could bring them hundreds or even thousands of dollars, even if they’re not required to file a federal tax return. Normally, you must submit your tax documents if you earn above a certain limit based on your filing status. But the IRS highlights that filing could be advantageous even when it’s not obligatory.
Robert Nassau, a law professor at Syracuse University and director of the school’s low-income tax clinic, noted, "I’ve witnessed refunds in the five-figure range" for individuals who claim both the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) when they have two or more children. He mentioned that such tax credits are "refundable," meaning taxpayers might receive a refund even if they have no tax liability, which he described as a "big deal."
Many lower-income individuals find they don’t owe taxes after the standard deduction and credits like the EITC and ACTC are applied. Sometimes their income is below the threshold required for filing, but they still need to file to get that refund. According to Elaine Maag, a senior fellow at the Urban-Brookings Tax Policy Center, these credits often represent the largest financial influx for low-income families each year.
Let’s break down how these credits function and determine who can qualify.
Understanding the Earned Income Tax Credit
The Earned Income Tax Credit is designed for workers with low to moderate income, offering up to $7,830 for families with three or more children in 2024. The highest credit for single or married workers aged 25 to 64 without children is $632. Maag explained, "The EITC begins to phase in starting with the first dollar earned."
Eligibility for the EITC includes "earned income," meaning wages from work, up to $59,899 for single filers and $66,819 for married couples filing together. Despite these benefits, nearly 20% of eligible taxpayers fail to claim the EITC, either from unawareness or not realizing they qualify. This was pointed out by former IRS Commissioner Danny Werfel earlier in the year.
Eligibility for the Child Tax Credit
Maag details that "once you’ve earned $2,500 and have children, you qualify for the child tax credit." This credit can reach up to $2,000 per child under 17, with the refundable ACTC component providing up to $1,700 per child. However, the credit starts decreasing once adjusted gross income surpasses $200,000 for individuals and $400,000 for married couples filing jointly.
As per regulations, the IRS cannot issue EITC or ACTC refunds until mid-February. You can check your refund status by using the IRS’s "Where’s My Refund?" online feature or their IRS2Go app.
