Earned Income Credit Expansion

I took a phone call this morning from an older gentleman (over 65) who had come to have his taxes done at our VITA site last year and had been told he didn’t need to file, and probably would never need to file again. He called just to double-check that he really didn’t need to file. His situation hadn’t changed from last year, but when he told me what kind of income he has, I said, “Hey, let me check something out, and I’ll call you back.”

Here are the changes that affect this gentleman:

  • In the past, people without children were only eligible for the Earned Income Credit if they were between the ages of 25 and 65. For 2021 tax returns, the older age limit is gone completely, and the younger age limit is changed. People age 19 and over who are not enrolled in school half time can receive the EIC. Note: young adults who are former foster children OR homeless may be eligible starting at age 18.
  • The AMOUNT of the EIC for people without children is also increased dramatically for 2021 tax returns.

Spread this news!! If you know any older adults or young adults without children, make sure to tell them that if they have income earned from work, they should definitely file a tax return this year, even if they are not required to file.
I quickly prepared a fake return for the man who called me, assuming his income was about the same as last year. It came out that he would be eligible for EIC of over $1,000! I’m so GLAD he called to check – if he had not called, he would have missed out!

These changes are, at this point, temporary. We’ll need to stay tuned to see if any of them are continued. The moral of the story? It never hurts to ask!

P.S. Other changes are permanent:

  • People with investment income up to $10,000 will be eligible for the EIC – that’s an increase in the limit amount.
  • In addition, there are now some situations where a person who is “Married Filing Separately” might be eligible for the EIC – they need to be legally separated from their spouse and not living together at the end of the year OR they need to have lived apart from their spouse for the last 6 months of the year. This change only applies to people with children.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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