 Internal Revenue Service IRS tax news on EITC Awareness Day. IRS and partners promote major tax benefit to millions of low and moderate-income workers. EITC Awareness Day. Honestly, aren't things like Awareness Days usually designed to warn you about something that's like bad? Like you know, beware there's a serial killer out there. So don't go out at night while eating cereal because the serial killer will steal your cereal, eat it in front of your face, and then kill you like with your own spoon, man. That's like his thing. Or possibly beware of COVID when visiting the wet market. Stay away from the raw bat booth. Instead, go hang out with the good people like at the Wuhan lab or something where it's completely safe. Honestly, I think this is the frame that the IRS is going for here. Beware of not having money. We, your government saviors, have fixed the problem of not having money with the EITC funded with money that we took out of your other pocket. And although I like the idea that the EITC at least tries to incentivize independence through requiring earned income, the idea that the government is going to solve people's money issues with programs like the EITC is like the idea that the government will solve COVID by mandatorily masking miners in their homes with their moms. It's ridiculous. You just end up with upset miners who are way behind in both school and social skills, who have developed asthma and a sense of dread every time they reveal their nose to the world. I'm telling you, like the next trend we're going to see with kids these days is the kids are going to stop chopping off their own noses and they're going to end up looking like Michael Jackson or possibly one of those who's from from like Whoville or something because like they learned that the revealing their nose is evil. You can reveal any part of your body at any time to anyone, but but not your nose, not your nose. And honestly, on most government assistant programs look less like a parent figure or a mentor that's trying to help to get people to be like independent. You know, that's what parent figures and mentors typically do, I would think. And they look they the government officials look more like a pimp attempting to foster complete dependence. And as a general rule, I would think short term help to get back on our feet. You know, that's a good thing. But long term dependence is something we should probably try to avoid, if at all possible, no matter what the advice we hear from government officials as they virtue signal, which means as they lie. Personally, I think that's something, you know, worth being aware of. But anyways, onto the news. I are 2023 dash 16, January 27 2023 Washington, the internal revenue service and partners nationwide today kicked off the earned income tax credit awareness day. There's a link to that here outreach campaign to help millions of Americans who earned $59,187 or less. A very specific number that if you earned $59,188, you're out. You're out that last dollar. In any case, it's a fairly complex credit. There's a link to the earned income tax credit here. There's pros and cons to the type of law that is put in place with the earned income tax credit. Most economists kind of like the earned income tax credit because there's at least an attempt to avoid the fundamental problem that often happens with welfare type programs. And that is that even if there's good intentions when they put the welfare program in, it typically often leads to people becoming dependent on the program as opposed to trying to help people to become independent because as soon as they start earning revenue on their own, they completely lose the benefits. And obviously the goal is to get enough revenue where they don't need the benefits anymore. But if you're not careful on how the thing is structured, you can easily see a situation where people get locked into the benefits and earning income actually becomes bad instead of good in those situations. So the earned income tax credit is trying then to give benefits as people earn income. The actual credit goes up as income is earned up to a specific point. So it actually graduates upwards like slopes upwards as you have earned income such as W2 income. And then of course, it does have to cap off at some point in time and then go back down. So economists kind of like that because they're trying to incentivize work at least to some degree. Some of the problems with the earned income tax credit is that it makes tax returns, especially in the low income side of things quite complicated. It used to be the tax returns for low income side of things were very easy. If you didn't own any taxes, you didn't even have to file a tax return because you don't own any taxes. But now the tax system is being used kind of as a benefit program as well. And so those low income tax returns can become quite complex. It used to be the low income would be very easy. Moderate income would be more difficult. High income becomes difficult. But but now the low income actually becomes somewhat difficult because you got all these changes to the laws, especially recently with things like these credits and the refundable types of credits. The other thing that kind of complicates the earned income tax credit is that it's coupled with children. So some economists don't like this as much, right? Because you would think that you can split those two things apart and you already have a child tax credit that you can change or alter whatever you want to do with that. And then the earned income tax credit, which is kind of a separate type of thing. So but those things are kind of combined together. So that makes it more complicated. So now you've got the earned income tax credit has increases as your income goes up, it caps off, and then it goes back down. So you have questions of what counts is earned income? Can I use this year's earned income versus last year's earned income? What's the cap? How does when does the when does the credit maximize itself? And that maximum peak will differ depending on how many kids you have from zero to three. And I don't think you get any more benefit after three kids. So you almost have to have tax software to kind of figure that out. When the IRS throws out numbers like this, 59,187, they're usually trying to throw out the highest number where someone could possibly get a benefit. And you would think that that would be like a single person with with three kids or something like that would be have the highest potential with the perfect income level, you know, or the highest income level, and so on when they put numbers on, you got to be careful with those numbers because they can be kind of deceiving because possibly at a high income level earned income level, you might still get the credit, but it could be darn close to zero a very low credit at that point in time. So the question really is, when does the credit maximize over over my circumstances, including how many kids do we have as a factor? Okay, so quote, this is an extremely important tax credit that helps millions of hardworking people every year in quotes that IRS acting commissioner Doug O'Donnell quote. But each year, many people miss out on the credit because they don't know about it or don't realize they're eligible. In particular, people who have experienced a major life change in the past year in their job, marital status, a new child or other factors may qualify for the first time. The IRS urges people to carefully to review this important credit. We don't want people to miss out in quote. So usually low income individuals probably want to be using tax software and the tax software usually kind of helps people out to see if they would qualify for these kind of credits. And a lot of people might be missing out on the credit in the past because again, we didn't have as much of these refundable credits when when the income was below a certain threshold. Now if some if your income is below a certain threshold, or if you know someone whose income is below a certain threshold, you might want to say, Hey, you should still check it out. Get the software. It's free if your income is below a certain level, possibly that you can get an IRS free file and see if possibly you have any benefits you could get like these refundable credits, earned income tax credit and the child tax credit. In 2022, 31 million eligible workers and families across the country have received about $64 billion in earned income tax credits with an average amount of more than $2,000 the IRS administrators, the IRS administrators, the EITC, which Congress originally approved in 1975. So it was developed in part to offset the burden of social security tax and provide an incentive to work. So the IRS and partners urge people to check to see if they qualify for this important credit. They also encourage people who don't normally file a tax return to review their filing for EITC and other valuable credit. So again, if you know anybody that doesn't normally file because their income is low, they should probably check it out with the software on IRS free file. The EITC is a tax credit for certain people who work and have low to moderate income. A tax credit usually reduces tax owed and may also result in a refund. Even though millions of people get the EITC, the IRS estimates that about 20% of EITC eligible taxpayers do not claim it. Workers at risk for overlooking the EITC include those living in non-traditional homes such as grandparent raising a grandchild whose earnings declined or whose marital status or parental status changed without children with limited English skills who are veterans living in rural areas who are Native Americans with earnings below the filing requirement. The IRS also reminds taxpayers that the quickest way to get a tax refund is by filing an accurate tax return electronically and choosing direct deposit for their refund. Tax software, tax professionals and other free options can help people see if they qualify for the EITC. So who can get the EITC then? Who qualifies for this thing? To qualify, taxpayers must meet certain requirements and file a tax return even if they did not earn enough money to be obligated to file a tax return. So even if your income is below the threshold that you actually owe taxes, you might still want to file because the earned income tax credit is what's known as a refundable credit. You might still get money even though it's not technically a refund. There's no need to guess about the EITC eligibility. Find out with the EIT assistant. There's a link to that here if you want to check that out. I would just check it out with the software because if you can get access to the free software then that's another way you can check it out fairly easily. So workers with qualifying children who may be eligible for the EITC if they're adjusted gross income, AGI was less than $53,057 in 2022. So now we're getting into the meat of it. So workers with qualifying children, so remember children are an indicating factor as well as income threshold and adjusted gross less than $53,057 for 2022, $59,187 for married filing jointly. So you'll note that that's the looks like they're talking about the peak of the how much income you could possibly have before you completely lose the credits if you also have the qualifying children. But if your income is that high, the credit is not at its peak. You're not getting the most out of the credit because it's going back down, the curve is going back down. So then the question often people will have, what's the income number to maximize the credit? Where actually get a significant amount of money depending on how many children you have zero to three. This individual can receive a maximum of $6,935 in EITC up from $6,728 in 2021. So again, they're giving you the maximums, right? They're making it look as big as possible, given the extent, you know, so not everybody that has the earned income tax credit is going to get like a $6,728, but it is obviously quite high if you had the maximum, you know, threshold. So the maximum EITC for earners with no dependence is $560. So now we see how those dependents, the children, typically children would be qualifying and have a significant impact. So that's a big difference. They're showing the maximums of the curve. So we have children on the on the curve and married marital status and then and then your income level are going to affect the, you know, which curve you're going to be on, how much the benefit will be. So it can be claimed by eligible workers between the ages of 25 and 64, married but separated spouses who do not file a joint return may qualify to claim the EITC if they meet certain requirements. EITC is for workers whose income does not exceed the following limits. So here's the limits. So you got 53,057, 59,187 married filing jointly. So single versus married filing jointly or other statuses other than married filing jointly. So with three or more qualifying children who have valid social security numbers. So three or more kids here. So 49,399, 55,529 married filing joint with two qualifying children who have valid social security numbers. Again, these are the maximums with three kids and two kids doesn't mean you're going to get the maximum credit. If you're at 49,000 of adjusted gross income, your credit's going to go down a lot from the maximum. This is so the next question you would ask, which they're not going to give here. You got to test it out or look at the tables would be what's the maximum maximum income to get the maximum credit with three kids, two kids, one kid. And we might make some videos on that because it's kind of fun to look at. But 43,492, 49,622 for married filing jointly with one qualifying child who have valid social security numbers and 16,480, 22,600 Taren married filing jointly with no qualifying children who have a valid social security number. Investment income must be below, must be 10,300 or less. So investment income, because if you have more than 10,000 of like dividend income, it's like, well, you must have a lot of money in savings or something or like if you got that in interest. So that's why they might limit it on that factor. So how to claim the EITC to get the EITC workers must file a tax return and claim the credit eligible taxpayers should claim the credit even if their earnings were below the income requirement to file a tax return. Free tax preparation helps is available online and through volunteer organizations. Those eligible for the EITC have these options. You got the free file on IRS.gov. Check it out. It's going to be a link to brand name software. Free brand name tax software is available that leads taxpayers through a question and answer format to help prepare the tax return and claim credits and deductions if they're eligible. Free file also provides online versions of IRS paper forms and option called free file fillable forms. If you qualify for the earned income tax credit, I don't suggest use them free file fillable forms because it's complex. That's why you use the software. But again, the IRS is trying to say, look, we have free options for everyone. That's what they want to be able to say, but no one uses the fillable forms to actual file their tax return unless they're crazy or, you know, because it's, you got free software, you know, so, but in any case, best suited for taxpayers, comfortable, whatever. You got free tax preparation sites. You got the EITC eligible workers can seek free tax preparation at thousands of volunteer income tax assistance. That's the VITA and tax counseling for the elderly, the TCE sites. To locate the nearest site, use find a location for free tax help. There's a link to that here. It's on IRS.gov. The IRS to go smartphone applications. You can look it up on your phone. I won't do it, but maybe you can. I don't, I don't put that phone away unless I'm, can't find it where I'm going, which means I use it fairly often with that GPS thing. But any case, or you can call the free 800-906-9887. I won't say that a hundred times because there'll be a link to this in the description. You could check it out on your, on yourself. Taxpayers should bring all required documents and information. Find a trusted tax professional. There's a link to that here. The IRS reminds taxpayer that a trusted tax professional can prepare their tax return and provide helpful information and advice. Tips for choosing a return prepare. There's a link to that, including certified public accountants, enrolled agents, attorneys, and many others who don't have a professional credential and details about national tax professional groups are available on IRS.gov. EITC recipients should watch out for unscrupulous return preparers, those unscrupulator. The IRS reminds taxpayers to be sure they have valid social security numbers for themselves, their spouse if filing a joint return, and for each qualifying child claimed for the EITC. The SSN social security number must be issued before the April due date of the return. There are special rules for those in the military or those out of the country. Most EITC refunds deposited by late February while the IRS began accepting 2022 returns on January 23, 2023. The IRS cannot issue a refund that includes the earned income tax credit or additional child tax credit, the ACTC before mid February. This is due to the 2015 PATH Act. There's a link to that law passed by Congress, which provides this additional time to help the IRS stop fraudulent refunds from being issued. So obviously this is the kind of law that people would try to take advantage of, unfortunately. And these are the balancing acts that we always have to kind of think about with these kind of programs you've got. Is it going to help people become independent or make people more dependent in the long run? And what's the fraud factor that's going to happen? Are we actually making victims out of people that could be eligible for the credit and then other people then possibly praying on them and stuff for that, which I think some of that might have happened with the refunds and stimulus payments and everything. People don't even want them, but now they might have a target on them because they're eligible for this money. And so they're worth that. But in any case, where's my refund? There's a link to that here. Should show an updated status by February 18th for most early EITC-ACTC filers. The IRS expects most EITC-ACTC related refunds to be available in taxpayer bank accounts or on debit cards by February 28th. If taxpayers choose direct deposit and there are no other issues with their tax return, get it right. Taxpayers are responsible for the accuracy of their tax return, even if someone else prepares it for them. Since the rules for claiming the EITC can be complex, the IRS urges taxpayers to understand all of them. Look out for scams. Be sure to choose a tax preparer wisely. Be aware of scams that claim to increase the EITC refund. So this is one of those areas. Again, sometimes it can actually make, you know, these programs can actually kind of make victims out of some people, right? Because now these people have this possible money source tag to them that other people might try to scam, you know, use them to scam that money source possibly and even get them in problems with legal problems because of faulty or improper returns. Scams that create fictitious qualifying children or inflate income levels to get the maximum EITC, I could leave taxpayers with a penalty. So it's kind of a funny credit because you could, like I say, income is usually bad for taxes, but it's actually good to a certain degree to have certain earned income. So now you have an incentive to have someone who has kids and then try to inflate their income to maximize the credit, which could, as we saw, it could be significant. And you got to be, you got to watch out for people like that. So visit IRS online to learn about other tax credits. irs.gov is a valuable first stop to help taxpayers get it right this filing season. They can check to see if they also qualify for the child tax credit, additional child tax credit or credit for other dependents. There's a link to that here. There's also other links, related items. There's the EITC central helpful resources for IRS partners and others publication five, nine, six earned income credit. There's that. And there's the tax professionals, another place for valuable EITS resources and assistance. So there's links to all that stuff here. There'll be a link to this in the description.