Question

If a taxpayer has investment income that exceeds a certain threshold, they are not eligible to claim the Earned Income Tax Credit. For 2021, that threshold is __________.

a. $3,250
b. $3,650
c. $5,000
d. $10,000

Answer 1

The threshold for investment income that would disqualify a taxpayer from claiming the Earned Income Tax Credit (EITC) for 2021 is $3,650.

Step-by-step explanation:

The threshold for investment income that would disqualify a taxpayer from claiming the Earned Income Tax Credit (EITC) for 2021 is $3,650 (option b).

The EITC is a tax credit aimed at helping low-income workers and families. It provides financial assistance through the tax system by increasing the payment received for work.

However, if a taxpayer's investment income exceeds the threshold, they are not eligible for the EITC. This is because the EITC is designed to assist individuals and families with limited income.