The Earned Income Tax Credit (EITC) is a tax credit for low to moderate-income families. If you meet the specific income and dependent requirements, it will reduce your tax liability. The EITC is refundable. That means that if the credit pays for your tax bill completely, but there are still leftover funds, you will get a refund for that amount.
What is earned income?
Earned income is any form of payment that you receive from doing work. It will be most likely reported on a W-2 or 1099. There are various types of earned income, including:
- Jury duty pay
- Long-term disability
- Nontaxable combat pay
- Self-employment income
- Combat pay
Do I qualify for the earned income tax credit?
The EITC has several qualifications. Read each one carefully to see if you qualify.
- You must have earned income.
- You must have a valid Social Security Number. Your spouse and qualifying children must also have one if you are claiming them or filing married filing jointly.
- Your filing status cannot be married filing separately.
- You must be a U.S. citizen or resident for the whole year OR a nonresident married to a U.S. citizen or resident and be filing a joint return.
- You cannot be the qualifying child of another person.
- You must meet the earned income, AGI and investment income limits listed below.
- Your qualifying child cannot be used by more than one person to claim the EITC.
- You cannot file Form 2555/2555-EZ for Foreign Earned Income.
If you do not have a Qualifying Child, you must:
- be older than 25 but younger than 65 at the end of the year.
- live in the United States for more than half the year.
- not be the Qualifying Child of another person.
For Tax Year 2018, the EITC is not available for taxpayers with an adjusted gross income of:
Your investment income must be $3,450 or less for Tax Year 2017 and $3,500 or less for Tax Year 2018.
Who is a qualifying child for the EITC?
A child must meet the following requirements to be used for the EITC.
A child must meet one of the following age requirements.
- Under 19 and younger than you or your spouse
- Under 24 and a full-time student in the last 5 months, as well as being younger than you or your spouse
- Any age and permanently and totally disabled at any time during the year
A child must meet one of the following relationship requirements.
- Son, daughter, adopted child, stepchild, eligible foster child, or a descendant of any of them
- Brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of them
- A legally adopted child
- A foster child who was placed with you by an authorized placement agency or order of the court
A child must have lived with you or your spouse for more than half the year. This must be in the United States.
A child must not have filed a joint return. If they did file a joint return, they and their spouse must not have been required to file and done it only to claim a refund.
How much is the credit currently worth?
The credit is substantial and worth looking into for most people, especially those with qualifying children. The amounts are as follows:
- $520 with no Qualifying Children
- $3,468 with one Qualifying Child
- $5,728 with two Qualifying Children
- $6,444 with three or more Qualifying Children
How do I claim the credit?
To get the EITC, you must file a tax return, even if you are not required to file taxes, and claim the credit on your return. E-file with TaxSlayer and we’ll suggest the right credits for you based on your answers to a few simple questions.
This article is up to date and accounts for tax law changes for tax year 2018 (tax returns filed in 2019). Learn more about tax reform enacted under the Tax Cuts and Jobs Act here.