The 2025 tax season has officially begun, and while Americans are looking to get the most out of their returns, the Internal Revenue Service says a fifth of eligible taxpayers fail to take advantage of a massive tax break every year.
The tax credit in question is the Earned Income Tax Credit, which was signed into law and designed to help “lift many financially challenged families out of poverty,” the IRS says.
The IRS says that, depending on the number of dependents someone has, the maximum credit for tax year 2024 is $7,830.In 2023, the average EITC amount was $2,743.
So, how does someone qualify for this seemingly untapped credit?
The IRS says that to qualify, a person must have under $11,600 in investment income and earn less than a specific income level from working.
If you aren’t making that much in investments, a person who is single with no children must be making less than $18,591 or $25,511 for those who are married with no kids.
If you have one child, single taxpayers must be making less than $49,084, or $56,004 for those who are married. Single taxpayers with one child need to make less than $55,768, while married couples with two kids must make under $62,688. Lastly, for those who are single with three or more kids the number is $59,899, or $66,819 for those who are married.
The EITC also has an online assistant tool that will help you calculate whether or not you qualify for the credit.
The IRS is not only looking to make more taxpayers aware of the credit and a potential chunk of change they could get back, but it’s also looking to fix how Americans file their taxes for free.
The Direct File program, which allows taxpayers to calculate and submit their returns without using commercial and sometimes costly tax software, is now available in 25 states after being expanded from 12 states last year, according to the Associated Press.
The program will allow people in some states with simple W-2s to calculate and submit their returns directly to the IRS, saving them the headache of the middleman.
The IRS shared that during the pilot program in 2024, Americans claimed more than $90 million in refunds.