Earned Income Tax Credit (EITC) Repayment Schedule for 2022 and 2023 – Latest News Update

The employed person’s tax credit directly reduces the amount of income tax owed by working taxpayers with lower incomes. Depending on a tax claimant’s number of children, tax return status, and income, the tax credit can run into the thousands.

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Here’s what you need to know about the 2022 EITC tax refund schedule and 2023 EITC numbers.

What is the Earned Income Tax Credit (EITC)?

The earned income tax credit, also known as the earned income credit (EIC), is a credit that low-to-middle-income workers can claim on their tax returns to reduce federal income tax liability.

Singles or married couples must have some form of earned income to qualify. Above a certain income level, they are not eligible for the credit. The number of eligible children is also an important part of the tax credit.

The credit ranges from $560 to $6,935 for the 2022 tax year (taxpayers file before April 18, 2023) and from $600 to $7,430 for 2023.

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For those filing federal returns in 2023, the maximum allowable adjusted gross income (AGI) is $59,187 for a couple filing together and having three or more children. Tables with amounts for the tax credit and the maximum AGI are in the next section.

At the very least, the EITC reduces the amount of tax owed. Low-income earners who owe little or no income tax can, at best, get the total rebate in the form of a tax refund.

How does the earned income tax credit work?

The EITC is a fairly complicated credit, even for non-first-time taxpayers. In fact, the IRS sees errors in nearly 25% of tax returns that claim it. Online tax filing software can help. The IRS also offers an “EITC Assistant” calculator.

The amount of the credit depends on the number of eligible children of the tax claimant, the status of the application, and the earned income or AGI. (AGI is defined as gross income — including wages, dividends, capital gains, business income, and retirement benefits — less income adjustments, such as student loan interest, contributions to a retirement account, teacher expenses, or alimony payments.)

Investment income must be $10,300 or less in 2022 ($11,000 or less in 2023).

On your tax form, the credit is filed under the “payments” section, which is a way to apply the credit dollar-for-dollar directly to the income tax you owe.

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Employees receive the credit from their first dollar of earned income. The amount of the credit increases with the income earned until it reaches a maximum. After that, it starts to taper off at higher income levels.

Taxpayers with an earned income or AGI above a certain level are not eligible for the tax credit at all. Below you will find these amounts for assessment years 2022 and 2023.

The phase-out amount starts at:

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• Single, householder, or widower: $9,160 for no children; $20,130 with eligible children.

• Married filing jointly: $15,290 for no children; $26,260 with eligible children.

The phase-out amount starts at:

• Single, householder, or widower: $9,800 for no children; $21,560 with eligible children.

• Married filing jointly: $16,370 for no children; $28,120 with eligible children.

Who is eligible for the EITC?

To qualify for the EITC, you must have earned income and meet certain AGI requirements.

Types of income include:

• W-2 wages from employment

• Earnings as a self-employed person (or acting or freelance).

• Certain disability benefits

• Benefits of a union strike

• Non-taxable combat pay

You do not need to include income from the following sources:

• Social Security

• Child support or alimony

• Unemployment benefits

• Pensions or annuities

• Interest and dividends

• Pay as a prisoner

What are “Eligible Children”?

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To claim a child for the EITC, a qualifying child must have a valid Social Security number, meet a qualifying child’s four tests, and cannot be claimed by more than one person.

The four tests for a qualifying child are:

• Age: a qualifying child can be any age if they are permanently and completely disabled; under the age of 19 and younger than you at the end of the year; or under the age of 24 at the end of the year and a full-time student for at least five months of the year and younger than you.

• Relationship: A qualifying child can be a son, daughter, stepchild, adopted child, foster child, brother, sister, half-brother, half-sister, stepsister, stepbrother, grandchild, niece or nephew.

• Residence: The child lived with you for more than half of the year.

• Joint declaration: the child does not file a joint declaration with anyone, for example a spouse, in order to claim tax reductions such as the EITC.

• Relationship: A qualifying child can be a son, daughter, stepchild, adopted child, foster child, brother, sister, half-brother, half-sister, stepsister, stepbrother, grandchild, niece or nephew.

• Residence: The child lived with you for more than half of the year.

• Joint declaration: the child does not file a joint declaration with anyone, for example a spouse, in order to claim tax reductions such as the EITC.

Can you claim the EITC if you do not have children?

It is possible to claim the EITC if you have no children, but the income limit is very low and the credit is small.

For tax year 2022, the maximum credit is $560 for filers without children. The maximum adjusted gross income is $16,480 for taxpayers filing as a single, householder, or widow and $22,610 for married couples filing jointly.

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For tax year 2023, the maximum credit is $600. The income figures are in the table above.

Requirements include:

• A valid citizen service number

• Do Not File Form 2555 (Foreign Earned Income)

• Main residence is in the US for more than half of the year

• Not claimed as a dependent or eligible child on any other tax return

• You are at least 19 years old (or 24 if you were a part-time student for at least five months a year, or at least 18 if you are a former foster child after age 14 or a homeless youth)

There are also special qualification rules for clergy, members of the military and taxpayers and their relatives who receive disability benefits.

How the EITC can affect when you receive your refund

Your tax refund may be delayed if you claim the EITC and file early in the year. The IRS must wait until mid-February to issue refunds when the EITC is claimed.

Expect a tax refund by March 1, assuming there were no issues with your tax return and you opted for direct deposit, the IRS says.

Common mistakes to avoid when claiming the EITC

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The IRS lists five issues to avoid when claiming earned income credit.

1. Your child is not eligible: The IRS states that most errors occur because the child does not meet the four requirements regarding relationship, residency, age, and filing status.

2. More than one person has applied for the child: Only one person can claim the eligible child. If the child counts as a qualifying child for more than one person (such as divorced or divorced parents), the IRS has some guidelines on how to choose which person can claim the qualifying child.

3. Social Security number or last name does not match the card: The social security number and name must match exactly how they appear on the social security card.

4. Married and registered as single or head of household: Taxpayers cannot claim the EITC if they are married and file as single or head of household.

5. Over- or Under-Reported Income or Expenses: Be sure to include all types of income from IRS Forms W-2, W-2G, 1099-MISC, 1099-NEC, and other income unless it is one of the exceptions listed above .

The takeaway meals

The EITC provides income tax relief for lower-income workers. If you think you qualify, look at the EITC tax refund schedules, seek tax help if needed, and submit an electronic application for a faster refund.

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While filing taxes is no fun for most people, a free money tracking app can make it much easier to keep your financial house in order.

FAQ

When can I expect my EITC refund?

According to the IRS, a refund with an EITC will arrive around March 1 if you filed electronically and opted for direct deposit, and there were no issues with your refund. By law, the IRS cannot make a tax refund with an EITC before mid-February.

Most taxpayers of all levels who file electronically should receive a refund within 21 days, the IRS said in January 2023.

Will there be an EITC in 2023?

Yes, there is an EITC for 2023. It rises to a maximum of $7,430 for the 2023 tax year.

Will tax refunds be bigger in 2023?

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No, not in general. Many taxpayers could see significantly smaller refunds in 2023, the IRS says, thanks to the expiration of extensive tax credits that served as pandemic relief. For the EITC, a taxpayer without children who received a $1,502 earned income credit in 2021 will receive a $560 credit for tax year 2022 ($600 for 2023).