The Earned Income Tax Credit (EITC) is a "refundable” federal income tax credit for low to moderate income working individuals and families. "Refundable” means that if the credit reduces the taxpayer’s liability to zero, any remainder of the credit is included in the refund sent to the taxpayer. The EITC can provide low income individuals hundreds of dollars in a tax return, and thousands of dollars to low income families.
There are certain requirements the taxpayer needs to meet in order to qualify for the EITC. In order to qualify for the EITC the taxpayer must file for a return, even if the taxpayer does not owe any money to the government.
Qualification Requirements for the EITC
In order to qualify for the Earned Income Tax Credit, the taxpayer:
1. Must have earned income
2. Must have a valid Social Security number
3. Must be a U.S. citizen or resident alien for the entire tax year—or a nonresident alien married to a citizen or resident alien
In order to qualify for the Earned Income Tax Credit, the taxpayer may NOT:
1. Be the qualifying child of another person
2. File a Form 2555 for foreign income exclusion
3. Earn more than the applicable income limit
4. Receive more than the investment income limit
5. File "married filing separately” if taxpayer is married
Additional requirements for families without children:
1. The taxpayer must have lived in the United States for at least half of the tax year.
2. Either the taxpayer or spouse, while filing jointly, must be at least age 25, and under age 65.
Qualifying Children Rules:
1. Qualifying children are sons, daughters, adopted children, stepchildren, or descendants (taxpayer’s grandchildren).
2. Qualifying children must be younger than the taxpayer or taxpayer’s spouse at the end of the tax year.
3. Qualifying children must be younger than the age of 19 at the end of the tax year.
4. Qualifying children may be any age if permanently and totally disabled.
5. Qualifying children must live with the taxpayer (or spouse if filing jointly) in the United States for at least half of the tax year.
6. Students who live at home, are under the age of 24 at the end of the tax year, and are younger than the taxpayer and or spouse, also qualify.
** Only one person can claim the same child **
A qualifying child may only qualify for an EITC for one taxpayer, even though the child may be the qualifying child of more than one taxpayer. If a child meets the rules to be a qualifying child for more than one taxpayer, the tie-breaker rules apply (see below).
Taxpayers who have a qualifying child who is claimed by another person using the "tie-breaker rules,” may only claim the EITC if he or she has another qualifying child that is not claimed by another person using the "tie-breaker rule.”
1. The parents have first priority
2. If two parents are not filing jointly, the parent who the qualifying child lives with longest during the tax year has priority
3. If the qualifying child lives with parents not filing jointly for equal amounts of time, the parent who has a higher "adjusted gross income” has priority.”*
4. If neither parent is seeking to treat the child as a qualifying child for EITC purposes, then the taxpayer with highest "adjusted gross income” has priority.”*
|Qualified Children||Maximum AGI Filing-Single||Maximum AGI Joint Filing||Maximum EITC Credit|
Investment income may not exceed $3,200 to qualify for the EITC.
*Adjusted Gross Income (AGI) is your gross income minus certain deductions. You can find it on line 37 of your 1040.
Take EITC Care!
- If you claim the EITC with one or more qualified child, make sure you have proof of the child’s residency in case of a credit disqualification or IRS examination.
- If you feel like another person will claim a qualified child that you are claiming, have proof that your requirements in the "tie-breaking rules” are met.
- There are separate EITC rules for military, ministers, members of the clergy, those receiving disability benefits, and those impacted by disasters.
- If a taxpayer was denied an EITC in the past, the taxpayer is deemed ineligible to receive an EITC in the current year unless he or she files a Form 8862 demonstrating eligibility.
- If you receive anything from the IRS regarding an EITC denial, call the Low Income Taxpayer Clinic!
When a taxpayer receives a letter or other mailing from the Internal Revenue Service (IRS) or a State or Local tax authority, it is critical that the taxpayer read and respond to the mailing in a timely manner. There may be a deadline listed in the mailing that the taxpayer must meet in order to retain certain rights. In addition, there may be financial penalties for missing the deadline to respond listed in a mailing from a tax agency. If you believe that you are entitled to an Earned Income Tax Credit and the IRS is disallowing it, call the Low Income Taxpayer Clinic right away at (202) 274-7315.
This webpage contains general guidelines regarding the Earned Income Tax Credit.
Do not claim an EITC credit unless you fall within the guidelines and qualify for an EITC credit. Punishment for tax fraud include disallowance, penalties, interest, and even prison time in more severe cases.
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