Who Qualifies for the Earned Income Credit on Their Taxes?

The earned income tax credit reduces the amount of tax you owe.

The earned income tax credit reduces the amount of tax you owe.

The earned income tax credit reduces the amount of income tax that low and moderate wage earners have to pay. If you qualify for the credit, you get to deduct the credit from the amount of taxes you’d otherwise owe. Families with children and without children who fall into certain income brackets can qualify for the tax credit. For some people, the earned income tax credit may be large enough that they won’t owe taxes for the year.

Taxpayer Qualifications

To qualify for the earned income tax credit, you must be a U.S. citizen or resident alien, or you must be married to a U.S. citizen. You and your spouse must have valid Social Security numbers, and you must have earned income from employment or from owning a business or farm. If all of your income is from investments, a trust or isn’t earned, you can’t qualify for the credit. If you don’t have qualifying children, you must be at least 25 but under 65 years old. Finally, you can’t be listed as a qualifying child on someone else’s tax return, and you must meet the income requirements.

Qualifying Children

The Internal Revenue Service considers qualifying children to be your biological son or daughter, adopted children, foster children, grandchildren and your minor brother, sister, niece or nephew. The child must be younger than you or your spouse, younger than 19 if not in school or as old as 24 if he's a full-time student. A child who is permanently and totally disabled qualifies at any age, but any child, to qualify, must live with you at least half of the year.

Income Requirements

Income requirements depend on the number of children you have and the amount of income you earn. If you are married with three or more qualifying children, you qualify for the earned income tax credit if your income is $49,078 or less. If you’re a single parent of three or more children, you qualify with an income of $43,998 or less. With two children, a couple qualifies with an income of $46,044 or less, while a single parent of two qualifies with an income of $40,964 or less. If you have one child, a couple qualifies for the earned income tax credit if their combined income equals $41,132 or less, while a single parent of one gets the credit with an income of $36,052 or less. A married couple with no children qualify for the earned income tax credit if their combined income is no more than $18,740, while a single person gets the credit with an income of no more than $13,660.

Figuring Your Credit

You can figure your credit by using the worksheet in the instructions for Form 1040 of your federal tax return. You can also figure your credit using the IRS’ online form. You also have the option of having the IRS figure your credit for you. You simply indicate on your tax return that you wish the IRS to figure the credit for you.

 

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