Earned Income Tax Credit
Also known as the EITC, the earned income tax credit is a tax credit for low- and moderate-income workers and their families that can cut your tax bill or give you a cash refund at tax time. Here’s a closer look at how the earned income tax credit works, how to qualify, and alternatives to consider if you’re not eligible.
What is the earned income tax credit?
The earned income tax credit is a benefit designed for working Americans who earn a low to moderate income. If you’re eligible, it will reduce the amount of taxes you owe so you can retain more of your hard-earned money. Also, if your earned income tax credit amount is greater than the amount you owe in taxes, you might receive a cash refund.
Facts about the earned income tax credit
Here are some things to know about the earned income tax credit:
- While the earned income tax credit may reduce the amount of taxes you owe, it can also lead to a cash refund, which might be more than what you actually paid in taxes.
- You may qualify for the earned income tax credit even if you’re not married or don’t have a child.
- If you choose to claim your earned income tax credit, the IRS won’t be able to issue your refund until the middle of February.
How to qualify for the earned income tax credit
To qualify for the earned income tax credit, your earned income and adjusted gross income must be below certain levels, which will depend on your filing status and how many children you have.
For the 2021 tax year or the tax return you’ll file in 2022, the earned income tax credit ranges from $1,502 to $6,728. In most cases, the less you earn, the higher tax credit you’re eligible for. Check the IRS website along with your official state website for more details on qualification requirements.
Alternatives to the earned income tax credit
If you don’t qualify for the earned income tax credit, consider these alternative options to get some extra cash:
Payday loans are short-term, small dollar loans you can pay back when you receive your next paycheck, usually within a few weeks. If you need some cash to hold you over until you get paid, a payday loan is worth considering.
With installment loans, you receive a lump sum of money upfront. You then pay it back over time via fixed monthly payments or installments. If you want a large amount of money at once, an installment loan can make sense.
Car title loans are secured loans that use your car as collateral. Once you get approved, you’ll give the lender your title in exchange for cash, which will be based on your car’s value. You can continue to drive your vehicle as you repay your loan.
Lines of credit
Lines of credit are flexible loans that are similar to credit cards. You’ll be able to borrow as much or as little as you’d like up to a set credit limit. When you pay back your loan, you’ll only pay interest on the amount you borrowed. A line of credit may be a good choice if you prefer a flexible form of financing.
What to do if you don’t qualify for the earned income tax credit
Advance America offers several personal loans that can provide quick funds for borrowers that don’t qualify for the earned income tax credit. These include payday loans, installment loans, title loans, and lines of credit. You may apply online or in store and get your money quickly, sometimes within 24 hours. Visit Advance America today to learn more about the loans we offer.