The Earned Income Tax Credit (EITC) is a tax credit available for working individuals and families that fall within a lower income bracket. To receive the credit, individuals must meet certain qualifications and file a return with the IRS even if they have no other filing requirement or owe no tax.
To receive the credit, individuals must have earned taxable wages, salaries, or tips from work done for an employer or themselves, or have income from certain disability plans. They must have a valid social security number, be a U.S. citizen for the entire filing year, and not have foreign earned income for the tax year. Individuals must also not be claimed as a dependent by a parent or guardian, nor can they use the "married, filing separately" status.
Qualifying for the Credit
To claim the EITC, you — and your spouse if filing jointly — must meet certain eligibility rules set by the IRS each tax year. Your adjusted gross income (AGI) and earned income must meet the limits shown on the IRS income limits chart, and investment income must meet, or be less than, the amount shown on the chart, which can be found at irs.gov.
Your earned income includes all wages, salaries, and tips you received within the filing year. For tax purposes, the IRS includes all self-employment or business income, clergy income, union strike benefits, long-term disability received prior to minimum retirement age, alimony, unemployment compensation, and capital gains.
Qualifying with Children
The EITC is available for those with and without children, but have set specific guidelines for each. The IRS defines a qualifying child as a son, daughter, adopted child, stepchild, foster child, brother, sister, half-brother, stepbrother, stepsister, or a descendent of any of them. They must be younger than you or your spouse at the end of the filing year, and be younger than 19, younger than 24 if a full-time student, or be permanently and totally disabled.
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