For 2021, the American Rescue Plan Act has made changes to the Earned Income Credit. Some of the changes are permanent, while others are for 2021 only.

Changes to EIC for 2021:

• Prior year earned income election - Taxpayers can elect to use their 2019 earned income to figure the credit on their 2021 tax return if the amount of income was greater in 2019 than in 2021.
• Age requirements were changed for 2021 as follows:
  • 24 if the taxpayer was a student for at least 5 months of the year
  • 18 if the taxpayer was in foster care any time after they turned 14 or were homeless in any taxable year
  • 19 for all other non-student taxpayers
  • There is no upper age limit to claim the credit (previously 65)
• The maximum credit for single taxpayers with no qualifying child has increased for 2021:
  • Maximum benefit for 2021 - $1,502 (previously $538)
  • Maximum income and still receive EIC in 2021 - $21,430 (previously $15,820)

Permanent changes to the Earned Income Credit (EIC)

• Taxpayers who claim children that do not have an SSN are now eligible for the credit using the rules for individuals with no qualifying children
• The investment income limitation has been increased to $10,000
• MFS taxpayers qualify to claim the earned income credit using the rules for taxpayers with no qualifying children if they either:
  • Did not have the same principal residence as their spouse for the last six months of the year; or
  • Are under a separation instrument and did not live in the same household as their spouse as of the end of the year