 Internal Revenue Service IRS tax news. IRS issues frequently asked questions for tax year 2021 earned income tax credits, but first an attempt at a joke I apologize in advance. After examining a pair of news reporters huge glasses, we found they were actually designed to hinder sight. News reporters responding, Yes, people think that our glasses are designed to help us see is a common misconception. When your job is spouting nonsense each day, the problem is not lack of vision. Vision itself is a hindrance. Staring at the confused look of the audience and cameraman is really distracting. It helps to have super special sight hindering glasses, so you can look right into the audience's face, emoting complete sincerity while not being bothered in the slightest by the audience's confused faces and those raised hands hoping to find some inkling of an answer to a relevant question. People often have a similar misconception about these things in our ears, helping us communicate somehow. But no, they're just earplugs. You see, sensory perception can lead people to make assumptions about the world based on them. And the first rule of journalism, Journalism 101 you might say, Don't trust your lying eyes or ears. The problem is how? Answer, special vision hindrance glasses and earplugs of course. However, after learning of this, viewers have started expressing their discontent with toxic fumes. But I'm sure the journalistic profession will come up with some remedy to that at some point. Internal Revenue Service IRS Tax News. IR 2022-45, March 2, 2022, Washington. The Internal Revenue Service today issued frequently asked questions FAQs for the 2021 Earned Income Tax Credit, the EITC to educate eligible taxpayers on how to properly claim the credit when they prepare and file their 2021 tax return. So the Earned Income Tax Credit is generally for low to moderate income taxpayers. It can be quite significant. It's a refundable credit, meaning that even if your tax liability goes below zero, you still get a quote refund in quote, which really isn't a refund but more of a kind of benefit program. It's actually complicated because they're trying to put a credit in place that will have a benefit to people that need the money without doing what often is the case when you basically have a benefit type of program and that is disincentivize people to work because then when you work and you have earned income, usually that means the credit's going to be phasing out under normal conditions, creating a disincentive to work. The Earned Income Tax Credit then is trying to say that as your income goes up at least to a certain degree, the credit actually increases instead of decreases and then it plateaus off and it goes back down. It's also tied into whether or not you have dependents. So you're going to have different levels of credits and plateaus and increases and decreases if you have no dependents and up to one, two and three dependents. So that's going to add a level of complexity to it as well. So again, economists kind of like this credit because it's an attempt not to disincentivize work and still give a benefit, but it can be kind of complicated. So I would recommend that if you're going to qualify for it, you probably want to use tax software to help you out with it. There's free tax software on the IRS website or they'll link you to it or take you there if you go to the free filing on irs.gov and then that'll probably help out with the filing. So let's take a look at this. We got the Earned Income Tax Credit, the EITC, helps load a moderate income, workers and families in the form of a credit to either reduce the taxes owed or an added payment to increase a tax refund. The amount of the credit may change if the taxpayers has children, dependents, are disabled or meet other criteria. These frequently asked questions, these FAQs, detail what the EITC is to earn income tax credit, how it was expanded for 2021, which taxpayers are eligible and how to claim it. The 17 new FAQs, frequently asked questions are, what is the Earned Income Tax Credit, the EITC? What is Earned Income? What are the Earned Income Limits for taxpayers without qualifying children? So obviously, you know, some of the, we're going to go through the basics here. So what is the Earned Income Tax Credit? It's going to be that, that pretty could be a substantial credit for a little moderate income people. What is Earned Income? Now, remember that's usually people tied to like W2 income, earned income. And the reason is because we don't want to disincentivize the Earned Income, so the credit actually goes up, as your Earned Income goes up, hoping that that will incentivize people to earn income. What is the Earned Income Limits for taxpayers without qualifying children? These are the things to change each year. There's been some substantial changes this year due to everything going on. How old must I be to claim the Earned Income Tax Credit if I do not have qualifying children? So they did some changes to the age limitations on this credit as well, which were more restrictive before. Do I need to have a Social Security Number, SSN, to be eligible to claim the Earned Income Tax Credit? Do my qualifying children need to have Social Security Numbers in order for them, in order for me to claim the Earned Income Tax Credit? What are the age requirements for claiming the Earned Income Tax Credit if I have a qualifying child? What are the Earned Income Limits for individuals with a qualifying child? Will any refund that I receive because I claim the Earned Income Tax Credit affect my government benefits? And so that's obviously a big one as well because this is the problem. This is that the Earned Income Credit is trying to address, and that is that people are actually fearful of getting income, which doesn't seem right, because if you do, then that could lower the benefits that you're getting disincentivizing work, which is the exact point of the Earned Income Credit. Try not to do that so that it can give the benefit people need without locking them into a situation where they're actually fear-working or earning the income. So in any case, what is the maximum amount of the Earned Income Tax Credit for 2021 for eligible taxpayers without qualifying children? Is there a limit on the amount of investment income I can earn and remain eligible for the Earned Income Tax Credit? So investment income, you're thinking of things like stocks and bonds. So in other words, if you had a lot of interest from say investments, you would think that you might not qualify for the Earned Income Tax Credit, given the fact that that's usually for people that need the money. And if you have a whole bunch of money sitting in investments that you're earning a significant amount of dividends and interest on, you would think it wouldn't be able. So if I am not filing a joint return with my spouse, can I claim the Earned Income Tax Credit? Who is considered a... So if you're filed like married filing separate, there's often limitations when that's the case. Who is considered a qualifying homeless youth for purposes of the Earned Income Tax Credit? So they've got some age requirements that I think there's an exception if you're a qualifying youth with regards to the age requirement tests. Who is considered a qualified former foster youth for purposes of the Earned Income Credit? Can I elect to use my 2019 Earned Income to figure my Earned Income Tax Credit? So this is another confusing component. And so usually the Earned Income could be good for the Earned Income Tax Credit. It could make your tax credit go up, but because of the problems in 2021, they're trying to give a benefit to say if your income was higher in last year, 2019, you might be able to use it to calculate the credit, which is weird because why would a higher income be good because the Earned Income Credit goes up to a certain degree as your Earned Income goes up. And so now you could possibly use the prior your Earned Income to calculate the current year credit, which is a benefit but confusing. Can a student claim the Earned Income Tax Credit 2021 what is a specified student for purposes of the Earned Income Tax Credit? File for free and use direct deposit. Taxpayers with income $73,000 or less can file their federal tax returns electronically for free through IRS free file program. So if you're calculating the Earned Income Tax Credit, just looking, glancing at these questions should strike some fear in your heart that you're going to not want to do it by paper. Most likely you probably want the software to help you out with the interview process so you can get software if your income's below the certain threshold at the free file program which will link you to third-party softwares. The fastest way to receive a tax refund is to file electronically and have it direct deposited into a financial account. So if you're looking to get those refunds faster then you want to get the direct deposit on there get everything electronic, try to make it you want to make everything go smooth for the IRS have it go automated, you would like to imagine that the machine could process the entire return without a physical person laying their hand on it because if they do then you're going to it might go to the back of the pile of stack that they have because you know the mandates that have gone in and they're backed up on all the paper return so if it takes an actual person to look at it then it might take some time so you want to make it perfect electronic file going directly into your bank account, deposited calculations correct because you're using tax software and so on. Refunds can be directly deposited into bank accounts, prepaid debit cards or mobile apps as long as a routing and account numbers provided more information about reliances so there's a link to that here and there'll be a link to this in the description