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EITC with no children $1300???


Corduroy Frog
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I was told at a recent seminar that the EITC for taxpayers with no children has been increased to $1300 (at optimum level).  This could result in people not filing to consider filing this year.

I suppose that there must be some earned income to qualify.  And with earned income comes SE tax.  Will the "optional" SE tax calculation result in more SE tax than the credit will absorb?  I'm sure after the optimum EITC level has reached, the calculation reaches a point of diminishing return such that income/SE tax is so high that filing requirements are met.

A lot of babbling above, but there is a question imbedded thither.  Will the "optional" SE tax calculation result in more SE tax than the credit will absorb?  I'm sure the answer is contingent on some sort of "sliding scale."

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53 minutes ago, Corduroy Frog said:

I was told at a recent seminar that the EITC for taxpayers with no children has been increased to $1300 (at optimum level). 

That is not correct, the max in that situation is $1,502 for 2021.

 

55 minutes ago, Corduroy Frog said:

I suppose that there must be some earned income to qualify. 

That requirement has not changed.

 

56 minutes ago, Corduroy Frog said:

And with earned income comes SE tax. 

Only if they are self employed.  Wages are also earned income.

 

1 hour ago, Corduroy Frog said:

I'm sure after the optimum EITC level has reached, the calculation reaches a point of diminishing return such that income/SE tax is so high that filing requirements are met.

 Optimum level runs way above the  >$400 filing requirement for SE income so not sure what your point is.

1 hour ago, Corduroy Frog said:

  Will the "optional" SE tax calculation result in more SE tax than the credit will absorb?

See the 2021 eitc chart for details.

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1 hour ago, Pacun said:

SE tax is higher than EIC at any level if there are no children. 

Well, it is close this year.  For example, a single person with $10,000 self-employment income would owe $1413 in SE tax and get $1419 in EIC for a refund of $6.

The "optimum" to get the maximum EIC of $1502 would require income of $10,545 with SE tax of $1490, and a refund of $12.  Much income above that and the SE tax is higher.  But anything lower, and the EIC would (just barely) cover the SE tax.

 

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10 hours ago, TexTaxToo said:

Well, it is close this year.  For example, a single person with $10,000 self-employment income would owe $1413 in SE tax and get $1419 in EIC for a refund of $6.

 

Sounds like a good deal if the earned income is on a W-2.  Not a whole lot of effort if it is SE income unless the taxpayer wants to pay in more to the SS System.

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