Why is my Earned Income Credit for 2021 so much less than in 2020?

Forum|Forum|4 years ago
February 10, 2022
2 replies
0 views

In 2020 my EIC was $1,187. My EIC for 2021 is $421. My income only increased about $5,000 for 2021.

SweetieJean

Alumni - Champ

EIC is calculated on a "bell curve." That is, it goes up as your income does, but then starts to come down. You're apparently on the downward slope. See table here:

1040 TAX AND EARNED INCOME CREDIT TABLES (2021) | Internal Revenue Service (irs.gov)

DianeW777

Level 15

The earned income tax credit (EITC) was created to help low income families and create a reward for working. For this reason the credit works in a pyramid. Starting at zero earned income there is no credit, as the income climbs and depending on filing status and number of childing living with the taxpayer the credit rises until it reaches a peak (maximum level income and EITC). From that point, the EITC begins to decline until the income level phases them out completely. The AGI is compared to the earned income as well to accurately calculate the correct EITC.

A chart is added below for your quick review and the link will provide more details.