EARNED INCOME TAX CREDIT(EITC)

The Earned Income Tax Credit is a credit for people who work and earn less than 51,567 It is also called EITC or EIC.

Important notes for the current year EITC Assistant:

  • You (and your spouse, if you are filing a joint return) and any qualifying children need Social Security numbers that are valid for employment to claim the credit.

  • You can not use any income received for work performed while an inmate to claim EITC. This includes amounts for work performed while incarcerated, in a work release program, or while in a halfway house.

  • If IRS audited you and took away the EITC, you may have special filing requirements and limitations. If IRS took away EITC in the audit, you may be required to file the Form 8862, Information to Claim Earned Income Credit After Disallowance. Find the Form 8862 here. Also, if the IRS notified you the disallowance was due to reckless or intentional disregard of the rules, you cannot claim the EITC for two years after the denial. If IRS notified you, the disallowance was due to fraud, you cannot claim EITC for ten years after the fraud determination.

Do I Qualify for EITC?

To qualify for EITC you must have earned income from employment, self-employment or another source and meet certain rules. You must either meet the rules for workers without a qualifying child or have a child that meets all the qualifying child rules for you.

Earned Income Tax Credit Rules for Everyone

To qualify for Earned Income Tax Credit or EITC, you, and your spouse if married and filing a joint return, must meet all of the following rules:

  • Have a Social Security Number that is valid for employment

  • Have earned income from working for someone, running or owning a business or farm or another source

  • Cannot file as married filing separate 

  • Must be:

    •  a U.S. citizen or resident alien all year or

    •  a nonresident alien married to a U.S. citizen or resident alien, file a joint return and choose to be treated as a resident alien.

  • Cannot be the qualifying child of another person

  • Cannot file Form 2555 or 2555-EZ (related to foreign earned income)

  • Your Adjusted Gross Income and earned income must meet the limits shown on the Income Limits, Maximum Credit Amounts and Tax Law Updates on irs.gov website.

  • Your investment income must meet or be less than the amount listed on the Income Limits, Maximum Credit Amounts and Tax Law Updates Page.

Qualifying Child Rules

Your child must have a Social Security Number that is valid for employment and must pass all of the following tests to be your qualifying child for EITC:
 

Relationship

  • Your son, daughter, adopted child1, stepchild, foster child2 or a descendent of any of them such as your grandchild

  • Brother, sister, half brother, half sister, step brother, step sister or a descendant of any of them such as a niece or nephew

Age

  • At the end of the filing year, your child was younger than you (or your spouse if you file a joint return) and younger than 19

  • At the end of the filing year, your child was younger than you (or your spouse if you file a joint return) younger than 24 and a full-time student

  • At the end of the filing year, your child was any age and permanently and totally disabled

Residency

  • Child must live with you (or your spouse if you file a joint return) in the United States for more than half of the year

Joint Return

  • The child cannot file a joint return for the tax year unless the child and the child's spouse did not have a separate filing requirement and filed the joint return only to claim a refund.


IMPORTANT:  Only one person can claim the same child. If a child qualifies for more than one person and one of the persons is a parent or parents, the non-parent can claim the child only if their AGI is higher than the parent(s). If the child qualifies another relative and the parent AGI rules do not apply, the taxpayers choose. If more than one person claims the same child, IRS applies the tiebreaker rules. Read more about Qualifying Child of More Than One Person here.

Refer to 596, Earned Income Credit or Publication 596 (SP) for information on the following:

  • Definition of School and Student

  • Residency Test and Homeless Shelters

  • Residency Test and Military Personnel

  • Birth or Death of a Child

  • Temporary Absences

  • Kidnapped Child

 

 

 

1. Adopted Child. An adopted child is always treated as your own child. It also includes a child lawfully placed with you for adoption.

 

2. Foster Child.  For EITC, a child is your foster child if the child is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. (An authorized placement agency includes a state or local government agency or an Indian tribal government. It also includes a tax-exempt organization licensed by a state or an Indian tribal government.)

 

3. Permanently and totally disabled.  Your child is permanently and totally disabled if both of the following apply: The child cannot engage in any substantial gainful activity because of a physical or mental condition and a doctor determines the condition has lasted or can be expected to last at least a year or lead to death.
 

4. United States. This means the 50 states and the District of Columbia. It does not include Puerto Rico or U.S. possessions such as Guam.

EITC - it's not just for families with children

If you do not have a child or do not have a child that meets all four qualifying child tests and your income is low, you may be able to claim EITC, the Earned Income Tax Credit. We believe this group of workers is the largest group who do not file a return to claim the credit. And, you must file a return to claim EITC.

If you or your spouse, if you are married and file a joint return, worked for someone, worked for yourself or had other earned income* you may be eligible for the credit.

After you and your spouse, if you are married and file a joint return, meet the EITC rules for everyone

( Find the EITC Rules for Everyone Here), you must meet these additional rules if you do not have a qualifying child*:

  • You (and your spouse, if filing a joint return) must have lived in the United States for more than half the tax year,

  • Either you or your spouse, if filing a joint return, must be at least age 25 but under age 65,

  • You (or you spouse, if filing a joint return) cannot qualify as a dependent of another person. If you are not sure if you or your spouse qualify as a dependent, read the rules in Publication 501, Exemptions, Standard Deduction, and Filing Information from irs.gov website. www.irs.gov

CLICK  the income levels button for this year,  prior years and the upcoming tax year . Also, you may be able to go back to claim the credit for the last few years.

EITC DUE DILIGENCE