If your combined income from two jobs still leaves you in a financial crunch, you could receive some relief from the IRS at tax time. The Earned Income Credit is awarded to taxpayers whose income falls within a certain range. If you receive the EIC, your tax refund could increase by few hundred to several thousand dollars. You’ll get this money even if you don’t owe any taxes or aren’t required to file a return. Some states also give out their own EIC if you get IRS credit. If you claim the EIC on your federal return, check with your state to see whether a second credit is offered.
Earned Income Credit Basics
The Earned Income Credit, or EIC, is based on a variety of factors. Your income from wages or self-employment, your filing status and whether you have any dependent children are all used to determine the credit you may receive. Each filing status and family size is assigned different limitations for the credit, so your income from one or two jobs is dependent on where you fall within these categories.
The IRS provides an EIC table that is revised and published every year. For each filing status and family size, there is an income range on the table that provides maximum EIC. Income you earn above and below this range awards you less credit. For example, if your income from the first job is below the maximum range, then adding a second job would give you maximum EIC and more income. If your income from the first job is near the upper section of the range, then adding the second job would give you less EIC.
Whether you have dependent children does not affect your ability to receive the EIC, but this factor combined with your income and filing status does. The lowest EIC ranges are assigned when you have no children and are single. If you’re married and file a joint return, your range is broader. The greatest EIC ranges are assigned to you when you’re married, file a joint return and have more than two children. The IRS only uses a maximum of three children to calculate EIC amounts. If you have more than three children, you can still claim all your children as dependents, but only three will be used for the EIC.
You can use the EITC Assistant on the IRS website at IRS.gov to determine whether your income from two jobs will increase or decrease your EIC. This calculator also lets you know whether your dual income disqualifies you from receiving any credit. If you earn too much, you may fall outside of the entire EIC range based on your income and other factors.
With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.