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Many taxpayers qualify for credits worth hundreds or even thousands of dollars — even if you don’t have a federal filing requirement.
Generally, you must file a tax return with earnings over a certain threshold, depending on filing status. However, submitting your return can be beneficial, even when it’s not required, according to the IRS.
“I’ve seen five-figure refunds” for those claiming both the earned income tax credit, or EITC, and additional child tax credit, or ACTC, with two or more children, said Syracuse University law professor Robert Nassau, director of the school’s low-income tax clinic.
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Both tax credits are “refundable,” meaning filers can still get a refund, even without tax liability, which can be a “big deal,” Nassau said.
Sometimes, lower earners don’t owe taxes after subtracting the standard deduction and tax credits, like EITC and ACTC. Their income could be below the filing threshold, but they must submit a return to claim a refund.
Together, the EITC and ACTC are “often considered the largest financial event of a low-income family’s year,” said Elaine Maag, a senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute, who wrote about the tax credits this week.
Here’s a breakdown of how these tax credits work and who qualifies.
How the EITC works
Designed for low- to moderate-income workers, the earned income tax credit is worth up to $7,830 for eligible families with three or more children for 2024. The maximum credit for single or married workers ages 25 to 64 without kids is $632.
“The EITC starts phasing in at the first dollar of earnings,” Maag said.
You may be eligible for the EITC with “earned income,” or wages from work, of up to $59,899 for single filers and up to $66,819 for married couples filing jointly.
However, nearly 1 in 5 eligible taxpayers don’t claim the EITC because they don’t know about it or don’t realize their qualify, former IRS Commissioner Danny Werfel said in early January.
Who qualifies for the child tax credit
“After you earn $2,500 and you have children, you’re also eligible for a child tax credit,” Maag said.
The child tax credit is worth up to $2,000 per kid under age 17, and the refundable portion, known as the additional child tax credit, is up to $1,700 per child.
The tax break decreases once adjusted gross income exceeds $200,000 for single taxpayers or $400,000 for married couples filing jointly.
By law, the IRS can’t issue EITC or ACTC refunds before mid-February. You can check the status of your refund via the agency’s “Where’s My Refund?” tool or the IRS2Go app.