As poverty-fighting tools go, the Earned Income Tax Credit earns bi-partisan support because it provides sizable cash injections to low-income Michigan residents (particularly those with children) working for a living.
As a certified financial planner professional, I can say that this is a complicated endeavor.
We could spend an afternoon discussing all the ins and outs of the EITC, particularly the fact that the state of Michigan will start sending out checks for the 2022 tax year, averaging $550 each to some 700,000 residents.
Why that is requires a long explanation about what the legislature did after approving an increased State EITC and held onto most of the money until an election year, but let’s keep it simple here.
If you made below $63,338 in 2023 and only have $11,000 in investable assets [like a 401(k) or 403(b) retirement plan], then you are likely eligible.
You should double-check the rules which we have provided below. If you find you are eligible, it is a must when you file your 2023 federal and state taxes to apply for the earned income tax credit.
If you don’t specifically ask for the EITC, you will not receive it. If you qualified for the EITC last year and filed your taxes with an EITC filing for your 2023 taxes, you are in for an extra check this year.
Two checks running into the thousands possibly can make a real difference in your personal financial situation.
Especially when the national household debt-load these days is at record highs, some $17 trillion which exceeds the annual GDP for the nation.
If you are carrying debt and you are low income, it is imperative you spend the time against filing for the EITC.
Now, In years past I’ve spent a lot of time on this subject, particularly in the old “Money Monday” segments we used to do.
Here is a quick primer:
- The earned income tax credit is one of the most important and helpful corners of tax law these days
- And with many people now paying full attention to filing it’s vital especially if you are in a lower income bracket
- The IRS says millions of dollars in refunds end up not paid because many eligible taxpayers don’t file for it or look to see if they qualify; the refund checks often exceed $3,000
- If you live in a non-traditional home, like a grandparent raising grandchildren or are responsible for the care of a disabled person
- Taxpayers whose earnings declined or whose marital or parental status changed
- If you don’t have children
- Have limited English skills
- If you’re a veteran, live in a rural area, or are a Native American
Here are the links I pulled from the IRS and the state of Michigan that should help you navigate the EITC to its full effect. This could turn into a very happy tax season.
Read: Michigan starts tax credit payments to 700K households: What to know
https://www.michigan.gov/taxes/iit/eitc