Welcome to tax teach my name’s Sean I’m A certified public accountant Specializing in taxation and today I Want to talk about the basics behind the Earned income tax credit and the Qualifications you need to meet in order To take the credit The Earned Income Tax Credit is a credit Meant for low to moderate earning Workers and their families it’s meant to Provide tax relief to those taxpayers The Earned Income Tax Credit ranges from 560 dollars all the way up to six Thousand nine hundred thirty five Dollars Typically the more children you have the Larger the credit Up to three children Um so the credit ranges from 560 dollars Maximum if you are single all the way up To 6935 if you have three children and also Depends on your filing status as well as How much money you make throughout the Year Next I’m going to talk about the actual Qualifications you need to meet in order To take the Earned Income Tax Credit you Should see now a list of some of the Qualifications you need to meet in order To take the Earned Income Tax Credit First qualification is you have to have Worked and earned income under 59 187 this limit will vary depending on

What filing status you are also just to Define earned income earned income is Income from your W-2 so if you’re Employed by someone or if you’re Self-employed it is uh income from your Businesses Second qualification is you have to have Investment income below ten thousand Three hundred dollars investment income Is think interest income dividends Capital gains royalties all these kinds Of incomes are considered investment Income You have to have a Social Security Number by your the due date of your 2022 Return so this year that would be April 18th But if you extend your return due date You have until October that’s the Extension due date You have to be a U.S citizen or resident All year And then if you work overseas and have Foreign earned income that might limit Your ability to take this credit And also a Special Rule I want to Highlight if you have no qualifying Children and are trying to take the Earned Income Tax Credit you have to Meet an age a special age requirement You have to be 25 or older but under 65 As well and if you’re married only one Of you have to meet this requirement so Keep that in mind if you have no

Qualifying children for the Earned Income Tax Credit you have to meet the Special age requirement when it comes to Tax credits there are two main kinds of Tax credits there are refundable credits And non-refundable credits and sometimes Credits are a mixture of both those two A refundable credit is what the Earned Income Tax Credit is what that means is If the Earth if your credit is over the Amount of taxes that you owe you get Money from the IRS I’ll give you an example here Let’s say you owe three thousand dollars On your tax return but you also have an Earned Income Tax Credit of six thousand Dollars Three thousand of that six thousand Credit goes to wiping out your tax Liability Right and then another three thousand Dollars is an IRS payment to you so You’re getting a three thousand dollar Payment essentially from the IRS You should be extra careful when you’re Filling out refundable credits that IRS Takes Extra Care and look at it looking At these items because they’re giving You more money Um if you miscalculate earn income tax Credit accidentally this can lead to you Not receiving your refunds and penalties Interest as well as possibly not being Able to take the Earned Income Tax

Credit in the future be extra careful When you are filling out your earned Income tax credit because the IRS likes To take Extra Care on looking on these Looking at these refundable credits A non-refundable credit is a credit Where you can wipe out your tax Liability but that’s it you can’t go Over your tax liability Now that we’ve gone over the basic Qualifications as well as what type of Tax credit the Earned Income Tax Credit Is Next I want to go over how to how to Report the tax credit on your tax return I’m going to go over this very briefly I Plan to make a video in the future going Over how to going over an example on how To calculate and Report the credit but For this video I’m going to go over Brief briefly how to report the credit You report the credit on line 27 of your Form 1040 and if you are if you have Children you have to fill out a schedule EIC Um so keep that in mind when it comes to Reporting your earned income tax credit It goes online 27 of your 1040 and if You have children you’re going to have To also complete schedule EIC I hope Going over the basic qualifications will Kind of tax credit the Earned Income Tax Credit is and then touching on How to report the tax credit it was a

Helpful starting point for you and your Journey of understanding taxes and how To take the Earned Income Tax Credit I Wanted this to be a starting point for You learning about this credit and have This in your radar as you prepare your Tax return this tax season I hope you found this video helpful and I’ll see you all next video [Music]