Many Kentuckians miss out on this tax credit. This is who qualifies, plus how to claim

Aaron Mudd
·5 min read

Every year, when tax season arrives and Kentucky filers scramble to get their returns together, far too many are leaving thousands of dollars on the table.

That’s according to University of Kentucky law professor Jennifer Bird-Pollan, who studies tax law and policy. As part of her research, Bird-Pollan regularly looks at the number of Kentucky filers who take advantage of the earned income tax credit.

According to Bird-Pollan, it’s too often a missed opportunity for Kentucky filers, and Internal Revenue Service data seems to bear that out.

Compared to every one of its border states apart from West Virginia, Kentucky had fewer EITC claims during the 2022 tax year. According to IRS figures, there were 344,000 such claims in the Bluegrass State that tax year, with the average credit payout at about $2,500.

For Tennessee, the total number of EITC claims for the 2022 tax year was 538,000, and in Ohio the figure was as high as 792,000. In West Virginia, the figure was only 126,000.

The great thing about the EITC is it reduces the amount of federal income tax owed and is refundable if the filer’s credit is larger than their liability. This puts a big chunk of money back into the pockets of the low- and middle-income working families the tax credit was designed to benefit. The only catch is you have to claim it.

“The EITC is designed as an income support for working families, and can provide a meaningful financial benefit – for some taxpayers it can be a cash transfer of up to 25-30% of their annual income - for those who qualify for it,” Bird Pollan told the Herald-Leader in an email. “However, unless a family files a tax return, they will not receive this benefit, so finding assistance to file a return is a very important first step to receiving the EITC.”

As explained by Jason Bailey, the executive director of the Kentucky Center for Economic Policy, the state’s EITC participation rate in tax year 2020 was 78.6%, according to the latest available IRS figures.

“If that is approximately the number today, that would mean around 94,000 Kentucky taxpayers were eligible but did not receive it,” Bailey wrote, in part, in an email to the Herald-Leader.

So who qualifies for the EITC and how can you claim it and similar tax credits on your return this year? Here’s what to know.

Who qualifies for the Earned Income Tax Credit?

According to the IRS, the basic qualifying rules are that you must:

  • Have worked and earned an income under $63,398

  • Have investment income below $11,000 in tax year 2023

  • Have a valid Social Security number by the time you file your return

  • Be a U.S. citizen or resident alien

  • Not file Form 2555 for foreign earned income

  • Meet certain rules if you are separated from your spouse and don’t plan to file jointly

Additionally, having a “qualifying child” can greatly increase the EITC amount you can receive, provided the child meets certain requirements related to age, relationship, residency and joint return requirements. For example, married couples with one child who are filing jointly can qualify for up to almost $4,000 if they have an earned income of $53,120.

You may also be able to eligible to claim the credit without qualifying children if you meet all of the following, according to the IRS:

  • Meet the basic qualifying rules for the EITC

  • Live in the U.S. for more than half of the year

  • You have not been claimed as a qualifying child on anyone else’s tax return

  • You are at least 25 years old, but younger than 65 years old

To claim this tax benefit, you must file a tax return even if you aren’t otherwise required to do so. If you have a qualifying child, you will also need to fill out an additional form.

What is the deadline to file my return and how can I track my refund?

While there are several changes to be aware of this year, the big deadline to remember this year is April 15. That’s the date most filers will need to have submitted their personal federal tax returns by, pay any amount owed or request a filing extension.

The deadline for filing a state return in Kentucky also falls on Tax Day April 15.

Here are a few other general reminders about your tax refund:

  • Filing your return electronically is the fastest way to get your refund, and you can track that status of that via the IRS tool Where’s My Refund?

  • Set up direct deposit with the IRS. The agency processes most refunds in 21 days or less for filers who submit their return electronically and set up direct deposit.

  • Kentucky also allows you to track the refund status of your state return online at refund.ky.gov.

How can I get help filing my tax return?

While you can take advantage of paid tax filing software, there are plenty of free resources to help you do it on your own.

Bird-Pollan encourages this and recommends avoiding any service that tries to entice you with promises of a faster refund. Be especially cautious if you are offered a “refund anticipation loan” or a “refund advance.” These are loans some tax preparation companies will offer based on your anticipated refund, and according to Bird-Pollan, are usually just attempts to get a cut of your tax refund.

The IRS also has free file offers that match income-eligible individuals with free and safe online tax preparation services.

Additionally, should you need in-person help, UK’s Rosenberg College of Law provides a tax clinic that is currently accepting appointments. More information is also available from the United Way of the Bluegrass.

Do you have a question about taxes in Kentucky for our service journalism team? Send us an email at ask@herald-leader.com or reach out to us via the Know Your Kentucky form below.