Jackson Hewitt^® Warns Taxpayers that Unemployment Could Affect Eligibility for the Earned Income Tax Credit

The EITC is one of the largest tax credits, valued at up to $6,660 for qualifying taxpayers with three or more children. Jackson Hewitt wants taxpayers to know that their EITC eligibility could be affected if they were unemployed or had significant employment changes during 2020.

The credit is based on earned income, and unemployment benefits are not considered earned income, therefore taxpayers who received unemployment benefits in 2020 could have their eligibility for the EITC impacted. Some taxpayers may not have earned enough income to qualify for much credit, while others may have had a drop in earned income that allows them to now qualify.

“According to a recent Jackson Hewitt survey, 36 percent of taxpayers reported that they earned less income in 2020, which could impact eligibility for the Earned Income Tax Credit,” said Mark Steber, Chief Tax Information Officer at Jackson Hewitt. “Due to high unemployment rates in 2020, we expect to see a shift in those who qualify for the credit and want to make sure people are very aware of their potential eligibility on EITC Awareness Day.”

According to the IRS, about 20 percent of taxpayers eligible for the EITC do not claim it each year. This year, a new group of eligible recipients may not be aware that they are eligible for the credit if they earned less than the maximum requirement in 2020. On the other hand, there may be a group of previous recipients who may no longer qualify because they earned more than the required amounts.

Tax year 2020 EITC income amounts: 

Investment income limit: $3,650 or less

Maximum credit amounts:

The maximum amount of credit taxpayers can claim:

• No qualifying children: $538
• One qualifying child: $3,584
• Two qualifying children: $5,920
• Three or more qualifying children: $6,660

Jackson Hewitt encourages taxpayers to pay attention to tax law changes and benefits on an ongoing basis. For example, recent tax legislation just passed in late December, which included stimulus payments for select taxpayers and some safe harbor provisions for EITC taxpayers providing both options and help. The special “lookback” for the EITC and the Child Tax Credit (CTC) allows taxpayers to use their 2019 earned income amount to determine eligibility for the 2020 EITC and CTC. Taxpayers can choose the more tax beneficial income year and use that to compute their 2020 EITC and CTC.

Taxpayers planning to claim the EITC should make sure to file early to confirm whether they are eligible for the tax credit. This year, because the IRS is not accepting and processing 2020 tax year returns until February 12, the Agency anticipates a first week of March refund for many EITC taxpayers.

During the 2020-2021 tax season, Jackson Hewitt's offices are committed to keeping their clients, staff, and communities safe with safety protocols designed to meet local, state, and federal guidelines. Jackson Hewitt offers many ways to file. Choose to make an appointment at your nearest location to file in an office or drop off your documents, or file from the comfort of your home with Jackson Hewitt Online or Tax Pro From Home. Visit jacksonhewitt.com to learn more about how to file with Jackson Hewitt. 

About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an innovator in the tax industry, with a mission to provide its hard-working clients access to simple, low-cost solutions to manage their taxes and tax refunds. Jackson Hewitt is devoted to helping clients get ahead and stands behind its work with its Maximum Refund Guarantee and Lifetime Accuracy Guarantee^® (restrictions apply, see Jackson Hewitt’s website for more details). Clients can choose to file at one of Jackson Hewitt's nearly 6,000 franchised and company-owned locations, including 3,000 in Walmart stores and online, making it easy and convenient for clients to file their taxes. For more information about products, services, and offers, or to locate a Jackson Hewitt office, visit www.jacksonhewitt.com or call 1 (800) 234-1040.

Methodology

The Jackson Hewitt survey was conducted online by Dynata on November 30, 2020, among 1,000 American adults aged 18 and older. Respondents to the survey were selected from those who volunteered to participate in online surveys. One thousand complete surveys were collected using the sample framework based on U.S. Census data for age, ethnicity, gender, region, and income.

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