Several tax credits have been enhanced which means more taxpayers are eligible to claim new tax credits this year. Optima Tax Relief explains how the enhanced Earned Income Tax Credit (EITC) will benefit taxpayers without dependent children.
Because of the American Rescue Plan’s expansion of the Earned Income Tax Credit, taxpayers aged 19 to 24 without dependent children are eligible for the tax credit. Taxpayers who are age 65 and older without dependent children are also eligible to claim this credit.
One study estimates an average boost of about $800 for this demographic. This change comes after the American Rescue Plan increased the benefit amount from $538 to $1,502. The plan’s expansion benefits young workers who have the lowest incomes in the nation, as well as parents who have children that do not live with them more than 50% of the year. The expansion also increased the income maximum to claim the credit from $15,820 to $21,430 for those filing single, and from $21,710 to $27,380 for those married filing jointly.
A total of 17 million American taxpayers are to benefit from the plan’s expansion, with estimated 5 million being young workers. Taxpayers should note that this expansion of the Earned Income Tax Credit is only available for the 2021 tax year. Because of this, it may benefit all taxpayers to file a return this year, even if they do not usually do so. Filing a return can mean claiming these time-sensitive credits while they are available.
Although the enhancement is only valid for the 2021 tax year, The 2021 Build Back Better Act includes the following reforms:
- Young workers without dependent children living in their home can access the EITC if they are below age 19
- Older workers without dependent children can access the EITC if they are above age 64
- The EITC amount increased from $560 to over $1,500 for all workers without dependent children
- The income cap increased for working adults without children, allowing childless workers with low pay to qualify
