JPMorgan CEO Wants to See This Tax Credit Improved

People who file taxes are generally advised to try to claim as many credits as they're eligible for. The nice thing about tax credits is that they serve as a dollar-for-dollar reduction of your tax liability. If you owe the IRS $1,000 but qualify for a $1,000 credit, that liability is wiped out completely.

Some tax credits are non-refundable, so they won't pay you money if you don't owe the IRS anything. But certain credits are refundable and will put cash in your bank account even if your tax liability is $0.

The Earned Income Tax Credit is one of them. Called the EITC for short, it's a credit that's designed to put money in the pocket of low-income households.

For the 2023 tax year, the EITC has a maximum value of $7,430. But JPMorgan CEO Jamie Dimon thinks the credit can be improved upon. Doing so could help a lot of lower-income households get to a better place financially.

How the tax credit currently works

Eligibility for the EITC hinges on your income combined with the number of qualifying children in your household. You don't need to have children living with you to claim the EITC, but the more you have, the more likely you are to qualify, and the more value the credit might have.

You can consult this table for EITC eligibility and to see how much the credit might pay you (keeping in mind that these numbers all apply to 2023):

There's room for improvement

Although the EITC currently offers its fair share of value, JPMorgan CEO Jamie Dimon thinks there's more work to be done. CNBC quoted Dimon as saying, "This is like a no brainer...and I would pay for it by taxing the wealthy a little bit more."

Of course, high-income taxpayers might cringe at the notion of paying more. But the reality is that boosting the EITC for a higher maximum value could do a lot of good for people who are currently struggling to do things like put food on the table and keep the lights on.

But while increasing the EITC's maximum value would no doubt be helpful, another important thing for lawmakers to consider is a way to increase eligibility for the credit. One option is to raise the income limit for tax filers with no children (or to raise the credit's income limits in general). Another is to simply try to raise more awareness about the credit, as an estimated 1 in 5 eligible EITC recipients don't end up claiming it.

What's more, EITC claimants who submit their tax returns early in the season often have to wait to receive their refunds due to strict verification rules associated with the credit. Those rules were put in place due to higher levels of fraud associated with the EITC. But if the IRS were to improve the technology used to administer the credit, it could prevent that delay in refunds for people who clearly need that money.

All told, the EITC could use some sort of overhaul. But until that happens, for now, check your eligibility to see if you qualify. And remember, even if your income is low enough that you're not required to file a tax return, you should consider submitting one anyway for the express purpose of claiming the EITC and getting a payday out of it.