With the 2023 tax season well underway, there are plenty of tax credits available, with some people eligible for a refund of more than $10,000.
The United State’s tax season is in full swing. It kicked off 23 January and runs through until 18 April, the Internal Revenue Service (IRS) will be receiving and processing tax returns from companies and individual taxpayers for fiscal year 2022. According to official figures from the government entity, in 2023 around 168 million Americans are expected to file their respective tax returns.
Year after year, thousands of people are eligible to receive tax credit that can result in a refund. However, not all potential beneficiaries claim the money, leaving thousands of dollars on the table. Here’s how you might be eligible for a refund of more than $10,000 from the IRS.
IRS refund over $10,000: who is eligible and how to apply
Individuals who are eligible for the Earned Income Tax Credit (EITC) and the California Earned Income Tax Credit (CalEITC) may be able to receive a refund of more than $10,000.
“If you are low-to-moderate income and worked, you may be eligible for the Federal and State of California Earned Income Tax Credits (EITC). The Federal EITC is a refundable credit available to low-to-moderate income individuals and families that is worth up to $6,935. The CalEITC is worth up to an additional $3,417,” notes the organization Free Tax Prep LA, which helps prepare taxes.
The #IRS Earned Income Tax Credit has helped workers with low and moderate incomes get a tax break for decades, but it may be brand new to someone you know. Help spread the word about #EITC: https://t.co/AqeTmmH4gxpic.twitter.com/s58MJ8ugso
Have earned income of at least $1.00 and not more than $30,000
Have a valid Social Security Number or Individual Taxpayer Identification Number (ITIN) for yourself, your spouse, and any qualifying children
Living in California for more than half of the tax year
Not be eligible to be claimed as a qualifying child or dependent of another taxpayer
How and when will the money arrive?
If you are eligible to collect both credits, you will need to claim them through your respective tax return. The exact amount depends on the total number of qualifying children, as well as your annual income.
CalEITC Credit 2022
No. of qualifying children
California income limit
Max. CalEITC
Max. YCTC
Max. FYTC
Max. federal EITC
None
$30,000
$275
$0
$1,083
$560
1
$30,000
$1,843
$1,083
$1,083
$3,733
2
$30,000
$3,037
$1,083
$1,083
$6,164
3
$30,000
$3,417
$1,083
$1,083
$6,935
Payment for each credit will come to you as a refund, minus any taxes owed and debts with the IRS or another federal or state agency, once the IRS and the California Franchise Tax Board have processed your tax return. The federal tax agency has up to 21 days after processing your return to start issuing payments, as long as you have a linked account for direct deposit, otherwise the timeline can be extended from six to twelve more weeks.
Taxpayers who exceed this limit will receive a notice and a refund check instead, which may take up to 10 weeks; TreasuryDirect®: Deposit into a TreasuryDirect® online account to buy savings bonds.
How do I get a 10,000 tax refund? You could end up with a $10,000 tax refund if you've paid significantly more tax payments than you owe at the end of the year.
You get a refund if you overpaid your taxes the year before. This can happen if your employer withholds too much from your paychecks (based on the information you provided on your W-4).
If the person receives multiple payments toward a single transaction or two or more related transactions, and the total amount paid exceeds $10,000, the person should file Form 8300. Each time payments add up to more than $10,000, the person must file another Form 8300.
Specifying more income on your W-4 will mean smaller paychecks, since more tax will be withheld. This increases your chances of over-withholding, which can lead to a bigger tax refund. That's why it's called a “refund:” you are just getting money back that you overpaid to the IRS during the year.
A trade or business that receives more than $10,000 in related transactions must file Form 8300. If purchases are more than 24 hours apart and not connected in any way that the seller knows, or has reason to know, then the purchases are not related, and a Form 8300 is not required.
Additionally, the amount of wages that qualifies for the credit is now $10,000 per employee per quarter for the first two quarters of 2021. The credit remains at 70% of qualified wages up to a $10,000 limit per quarter so a maximum of $7,000 per employee per quarter for all of 2021.
In general, disqualifying income is investment income such as taxable and tax-exempt interest, dividends, child's interest and dividend income reported on the return, child's tax-exempt interest reported on Form 8814, line 1b, net rental and royalty income, net capital gain income, other portfolio income, and net ...
Claiming 1 on your tax return reduces withholdings with each paycheck, which means you make more money on a week-to-week basis. When you claim 0 allowances, the IRS withholds more money each paycheck but you get a larger tax return.
If you qualify for tax credits, such as the Earned Income Tax Credit or Additional Child Tax Credit, you can receive a refund even if your tax is $0. To claim the credits, you have to file your 1040 and other tax forms.
So if you get a larger than expected refund, hold your horses. The IRS will want the money back, with interest. And there are even some cases in which the matter gets way more serious than that. Stephen McDow of Laguna Beach, California learned this the hard way.
If you receive a large tax refund, you are likely having too much withheld from your paychecks. When you start a new job, you will have to fill out employment paperwork.
No more than three electronic refunds can be deposited into a single financial account or pre-paid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund. Whether you file electronically or on paper, direct deposit gives you access to your refund faster than a paper check.
Your interest-free loan to the government could have cost you. Many people rejoice each year when they receive their tax refund, but high refund amounts could mean that you overpaid your taxes throughout the year. And if that's the case, you've essentially lent the government money, completely interest-free.
Introduction: My name is Tish Haag, I am a excited, delightful, curious, beautiful, agreeable, enchanting, fancy person who loves writing and wants to share my knowledge and understanding with you.
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