A Tax Credit for the Rest of Us
You know you have officially joined the middle class if you know the difference between a tax deduction and a tax credit. A tax deduction is a qualifying expense that the IRS subtracts from your taxable income before assessing how much you owe. With a tax credit, the IRS calculates how much you owe and then gives a discount by subtracting the tax credit amount from your tax obligations. The middle class, the ones who complain about living paycheck to paycheck despite that their income exceeds $100,000, count every penny that they spend on the Internet while working from home and every paper they paid to print at FedEx Office, hoping that the tax deductions will reduce their taxable income enough to move them into a lower tax bracket. As for you, owing taxes sounds like high class worries. You are just high enough above the poverty level not to qualify for public assistance but not high enough to afford basic necessities. To find out more about how this year’s tax credits can give you opportunities to improve your financial situation, contact a Miami debt lawyer.
How Much Money Can You Get From the Earned Income Tax Credit?
The earned income tax credit (EITC) is for low-income and middle-income people who have employment income. These are the eligibility requirements for the 2024 tax year:
- If you cannot claim any dependents, you qualify if your income is less than $18,591, or less than $25,551 if you are filing jointly with your spouse.
- If you claim one dependent, the eligibility threshold is $49,084 for single filers and $56,004 for married couples filing jointly.
- For families with two dependents, you can get the EITC if you earn up to $55,768 and file as a single person or $62,668 if you file as a married couple.
- If you claim three family members, you can file as a single if your income is $59,899 or as a married couple if your income is up to $66,819.
The amount of money the EITC gives you on your tax refund also depends on the number of dependents, but it only counts minor children, not your spouse or any other adult family members that you claim as dependents. If you don’t have any dependent children, your EITC tax refund is $632, for one child it is $4,213, and it only gets higher when you claim more children.
How Big of a Dent Can the Earned Income Tax Credit Make in Your Debt?
By now, you probably know how quickly tax refunds disappear; every furniture store and car dealership in town knows it, too. A debt lawyer can help you strategize about how best to put your tax refund to use improving your finances, whether by filing for bankruptcy or opening a secured credit card account or savings account.
Work With a Debt Lawyer About Making the Most of Tax Credits
A South Florida debt lawyer can help you if your tax refund is the only windfall you are likely to receive in the foreseeable future. Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.
Sources:
cnbc.com/2025/02/06/low-income-tax-refunds.html
irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned-income-tax-credit-eitc-tables
