Do You Qualify for Earned Means Tax Credit EITC?
One of the incentives that the government provides for people to file their taxes on time is the Earned Income/Means Tax Credit. This is a type of refundable tax credit specially offered to low- and moderate-income workers.
The earned income credit rate depends on a variety of factors, including the status of your tax filing, income, and the number of children if any. Single individuals, without children, can also apply for EITC.
How Does It Work
You must make the claims when you file your tax returns.In case you weren’t aware that you actually qualified for the tax credit, and so failed to make a claim in the last three years, all you need to do is inform the IRS so they can start facilitating your tax credit.
The biggest advantage of the EITC is that it could help cut down the amount you owe for taxes significantly. Apart from that, however, you could even earn a refund from the IRS. Depending on the qualifications you meet during filing, it’s even possible that the amount of refund you’re entitled to get is more than what you actually paid for.
Do note, however, that filing this claim could mean a delay in your refund. That’s because according to law, the IRS could only start issuing refunds for EITC claims in mid-February, and nothing sooner.
Who Qualifies for EITC
The IRS has very specific qualification requirements when it comes to approving EITC claims. For one, you should have at least $1 earned income, not including pensions and unemployment.
For the 2020 filing, you should file jointly as a married couple, even if you are separated. This requirement is relaxed a bit in 2021, which now allows separate filing, as long as you’re still married to your spouse. The separation must be at least for six months, and if you have children, they should be living with you for more than half the time in the year.
Your investment income, should you have any, should be no more than $3,650. Come the 2022 filing (for your 2021 taxes), that amount set increases significantly to $10,000.
In case of bankruptcy, the tax refund is considered to be an asset. This means that although you may be entitled to a significant refund amount, the Chapter 7 bankruptcy trustee could still take it away to pay off your creditors instead.
The application of this policy is on a case-to-case basis, though, and depends on your own state’s exemption law.
How Can A Lawyer Help
If you are faced with this issue, it is highly recommended that you seek the help of Brooklyn bankruptcy attorneys. One of the remedies you can pursue is to seek exemption for your anticipated EITCa as an asset. This way, the trustee will have no power to take it away from you.
If you are unsure about the exemption policies of your state, your bankruptcy attorney in Brooklyn can help facilitate your application for exemption.
Not all exemption filings are approved, though, which is why you must first consult with Brooklyn bankruptcy lawyers. Their skills and know-how specific to local state laws can help you better strategize for your current situation.
Your bankruptcy lawyer in Brooklyn can also help you plan for other remedies to mitigate the impact of your bankruptcy filing.
In case your state doesn’t recognize any exemptions, for example, your bankruptcy attorney Brooklyn could advise you to delay your bankruptcy filing, at least until you have actually received your refund.
That way, even if you file your bankruptcy later on, the trustee can no longer have access to your EITC, presumably because you’ve already spent it on necessities, such as rent or mortgage payment, food, gas, and utilities.
Consult with a bankruptcy lawyer Brooklyn from firms such as Ursulova Law Offices regarding your bankruptcy filing and EITC claim. The sooner you do so, the better your prospects could be at finally resolving this.