$25M in Illinois income tax credits left unclaimed. Check if you’re missing out on money

More than 70,000 Illinois residents claimed a federal earned income tax credit without also claiming the state’s in 2022, leaving more than $25.3 million on the table.

Those who received “earned income” last year, meet residency and income requirements and file a tax return can qualify for an Illinois income tax credit worth $560 to $6,935, state officials said in a Jan. 27 press release.

“We continue to work with Governor (JB) Pritzker and his office to coordinate outreach efforts to increase state participation by targeting taxpayers who qualified for federal EITC credit but failed to claim the state EIC credit on their Illinois returns,” state Department of Revenue Director David Harris said in the statement. “We urge all working taxpayers to check their eligibility status as this can change each year and be sure to claim both the state and federal credits to maximize savings.”

People who qualify for the federal earned income tax credit automatically qualify for Illinois’ tax credit, and it’s not too late for those who didn’t claim the state’s credit to file amended returns for the past three years.

Who qualifies for the Illinois earned income tax credit?

Taxpayers who earned $59,187 or less in last year should use an online Internal Revenue Service tool to see if they qualify for earned income tax credit, the IRS says.

Single-filers under the age of 25 must have a qualifying dependent to be eligible for the credit, but those ages 25 to 64 do not need to have a dependent to qualify.

Here are the income limits for tax year 2022:

Single, head of household or widowed filers

• $16,480 with zero children or other relative dependents

• $43,492 with one dependent

• $49,399 with two dependents

• $53,057 with three dependents

Filing jointly

• $22,610 without dependents

• $49,622 with one dependent

• $55,529 with two dependents

• $59,187 with three dependents

An investment income limit of $10,300 applies.

Maximum credit amounts are determined by the number of qualifying dependents:

• No qualifying dependents: $560

• One qualifying dependent: $3,733

• Two qualifying dependents: $6,164

• Three or more qualifying dependents: $6,935

The Illinois earned income tax credit is calculated at up to 18% of your federal claim, but will increase to 20% for the tax year beginning Jan. 1, 2023.

Along with the income limits, the following eligibility guidelines apply to the tax credit:

• Have worked and earned income less than $59,187

• Have a valid social security number by the due date of your 2022 return (including extensions)

• Be a U.S. citizen or “resident alien” all year

• Not file Form 2555 (Foreign Earned Income)

• Meet certain rules if you are separated from your spouse and not filing a joint tax return

There are different qualifying rules for members of the military or clergy, as well as taxpayers and their relatives with disabilities. The qualification assistant can help you determine your eligibility.

How can you claim the Illinois earned income tax credit?

The Illinois Exemption and Earned Income Credit form (or Schedule IL-E/EIC) is available online and must be submitted with a copy of the first two pages of your federal Form 1040 or 1040-SR.

If you filed Form IL-1040 for a previous year and received the federal income tax credit but did not receive the state’s, you can file IL-1040-X (Amended Illinois Income Tax Return) to claim prior years’ credits. The Illinois Department of Revenue says you should also include Schedule IL-E/EIC.

“Unless you were required to file US Form 1040-X and received a refund of the Earned Income Credit, you may only receive a refund of your Illinois Earned Income Credit if you file a return claiming the credit within three years of the extended due date of the return (generally October 15th),” the Illinois Department of Revenue website reads.

The state department says errors in your paperwork can cause delays or result in a denial of your state EITC claim. The department advises taxpayers to avoid the following common errors:

• Claiming a child who does not meet the qualifying tests for age, relationship and residency

• Social security number or last name mismatches

• Filing as single or head of household when married

• Over or under reporting of income or expenses

• Entering the incorrect amount of federal EITC/EIC credit

Illinois retirees may be owed up to $300 in tax rebates, but they may have to file for it