"When I went to do my taxes (in 2022), I discovered I was no longer entititled to this credit," said Judith M., a freelancer who had benefitted from the Earned Income Tax Credit (EITC) nearly every year, and according to her, "had pretty much counted on it."

When this article originally published on March 16, 2022, older adults age 65 and older could qualify for roughly $1,500 in tax relief from the EITC for the tax year of 2021. But that has since ended. 

What are the benefits from the Earned Income Tax Credit?

Enacted in 1975, the Earned Income Tax Credit (EITC) was created to serve as an antipoverty program, helping millions of American families every year.

The purpose of the EITC is to offer American workers and families a tax break if they qualify as low- to moderate- income. "If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund," says the IRS on its website.

Are older adults still eligible for the Earned Income Tax Credit?

No. Unfortunately, not anymore. 

According to a Jan. 11, 2023 revised explainer video posted on the IRS' YouTube channel it is only "for some people," where it previously was extended to older adults age 65 and older during the pandemic. 

For the 2021 tax year, the American Rescue Plan (ARP) temporarily expanded the Earned Income Tax Credit, including raising the maximum benefit from $540 to nearly $1,500, and included eligibility (for the first time) for young adults age 19-24 and to people age 65 and older. According to the Center on Budget and Policy Priorities (CBPP), the changes in ARP provided relief to more than 17 million people.¹

"After the expansion expired, the EITC ... returned to an extremely small credit amount - too small even to fully offset federal income and payroll taxes for workers at the federal poverty line," CBPP's website says.

What's being done to make the extension of the Earned Income Tax Credit permanent for older adults?

It's no secret that the Earned Income Tax Credit is a real benefit that not enough people know about. At least 20% of eligible workers don’t claim this benefit each year, likely because they are unaware they qualify.² Not to mention, the cost of administering the EITC program ratio to claims paid is less than 1%.³

AARP has been advocating with Congress to remove the age caps from the EITC permanently to reflect the rising retirement age and that many workers are feeling the need to continue working beyond the current retirement age.

AARP's Cristina Martin Firvida, vice president of financial security, told Roll Call that the age cap disqualifies 2 million older workers from the benefit.

"Removing the outdated age cap on this credit would help keep many workers age 65+ in the workforce and out of poverty," said Kathi Brown in an April 2023 AARP blogpost.  When polling more than 1,000 U.S. adults over the age of 50 on removing the age caps, AARP found:

• 3 in 4 (75%) support removing the age cap, including nearly half (47% strongly support removing it)⁴
• Only 28% somewhat supported removing the age cap⁴

"Taking it (Earned Income Tax Credit) away is really bad for us," Judith M. told us. "Many, if not most, of us still work, and many of us are still lower income.  Turning 65 does not somehow bestow wealth or less need on us."

So who is eligible for the Earned Income Tax Credit?

Before you find out if you qualify, it's important to note that this tax break isn't a loan, and social security benefits and pensions don't count as income for this tax credit.

To qualify for the Earned Income Tax Credit, or EITC, you must:

• Be at least 25 years old, but not older than 65. If you're claiming jointly without children, only one person needs to meet the age requirement.
• Have worked and earned at least $1 in income (pensions and unemployment don't count), but no more than $63,398.
• Have investment income below $11,000 in the tax year 2023
• Have a valid Social Security number by the due date of your 2023 return (including extensions)
• Be a U.S. citizen or a resident alien all year
• Not file Form 2555 
• File your tax return by April 18, 2024.

There are other special rules for separated couples, as well as members of the military and cleary, or people who have disability income or children with disabilities. 

If you're confused or unsure, the Internal Revenue Service (IRS) has made it easy for you find out if you qualify through their EITC Assistant, or calculator that determines your eligibility. 

To use the EITC Assistant, you'll need:

•  Income statements such as W-2s, 1099s
•  Documents showing taxes withheld or money paid to you
•  Any expenses or adjustments to your income

To ensure you protect your personal information, the IRS recommends not to provide sensitive information such as your name, Social Security number, address, or bank account numbers. To start, answer a few quick questions about yourself to see if you qualify for the EITC.

How can I get help filing my tax return?

There are a few free basic tax return preparation services that you may qualify for, including the IRS's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.

Now, for more than 50 years, VITA sites offer free tax help to people who need assistance in preparing their own tax returns, including:

• People who generally make $58,000 or less
• Persons with disabilities; and
• Limited English-speaking taxpayers

You can find a VITA site in your community, often at neighborhood centers, libraries, schools, shopping malls, among other convenient locations. Use the VITA Locator Tool or call 800-906-9887 to find the nearest site near you.

GetYourRefund.org, a nonprofit service built by Code for America, is another resource that can provide information about how to get the EITC. If it’s your first time filing your taxes or if you need help filling out the form to claim your EITC credit, GetYourRefund.org has free resources and IRS-certified volunteers who can help. 

Will my tax refund be delayed if I claim the Earned Income Tax Credit? 

Yes. According to the IRS, if you claim the EITC, your tax refund could be delayed. Unfortunately, by law,  the IRS can't issue EITC refunds before mid-February. You can file your tax return now and the IRS expects you to see most EITC related refunds within your bank account or on debit cards by March 1. 

To be sure you can get your refund by March 1, you can: 

• File your return online
• Choose the option of getting your refund by direct deposit
• Make sure the IRS doesn't find any issues with your tax return

The IRS has ways you can avoid common errors when filing your tax return. And if you're wanting to track the status of your return, the best way to do that is through the IRS' Where's My Refund? or the IRS2Go mobile app.

Sources

1. Center on Budget and Policy Priorities. Policy Basics: The Earned Income Tax Credit. Updated April 28, 2023. Found on the internet at https://www.cbpp.org/research/federal-tax/the-earned-income-tax-credit

2. UNC School of Government ncIMPACT Initiative. EITC (Earned Income Tax Credit). Found on the internet at https://ncimpact.sog.unc.edu/our-work/economy/eitc/

3. House Committee on Ways and Means, Subcommittee on Oversight, Hearing on Improper Payments in the Administration of Refundable Credits, May 25, 2011.

4. Kathi S. Brown. Earned Income Tax Credit. AARP Research. April 2023. Found on the internet at https://www.aarp.org/research/topics/economics/info-2023/earned-income-tax-credit.html