American Rescue Plan 2021: Expanding the Earned Income Tax Credit

          The American Rescue Plan (ARP) Act of 2021 is expansive and has the potential to touch every aspect of the lives of Taxpayers, as we have mentioned in previous posts. This is something to keep in mind for those who have not filed, have filed an extension, or who may see the need to file an amended Tax Return. For example, the Earned Income Tax Credit (EITC) has changed, not just for this year, but for years to come.

          As a reflection of the times, there is an increase in the amount of investment income allowed while still qualifying for the EITC. The new amount is $10,000 starting this year. Married, but separated spouses who do not file jointly may attempt to qualify for this credit. They need to be legally separated and not live in the same home. However some changes only apply to this year, like being able to receive half of this credit in advance. For those who have their main home in the United States or Puerto Rico more than half the year, this credit may be fully refundable. Check with your Qualified Tax Professional to makes sure you do not miss out on anything.

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