If you meet the income and other filing requirements, the IRS requires you to file an annual tax return. The government considers your adjusted gross income, filing status and age when determining if you must file a tax return. However, even if you don’t meet any of the other requirements to file a federal income tax return, you may be eligible for the Earned Income Tax Credit, which could give you a tax refund.
The gross income on your tax return includes earned income such as wages, salaries, tips, sales commissions and self-employment income. You must also report income you receive from interest, dividends, capital gain distributions, gambling winnings, disability income or unemployment income as taxable income. To qualify for the Earned Income Tax Credit, you must have some source of earned income. If you didn't work during the tax year, long-term disability benefits you receive under your employer's disability retirement plan qualify as earned income and will get you the EITC you have coming. The government considers the benefits you receive as earned income for EITC purposes as long as you haven't reached your minimum retirement age.
Earned Income Tax Credit
Whether or not you qualify for EITC depends on the amount of earned income you report and if there are any qualifying children in your household. Your filing status also matters, as you won't qualify for the credit if your filing status is “married filing separately.” Since you must file a federal tax return to claim the credit, you, your spouse (if you are filing a joint return) and any qualifying child you list on Schedule EIC must each have a valid Social Security number.
The IRS defines a qualifying child for EITC by several criteria. A qualifying child can be your natural son or daughter or an adopted child, stepchild or foster child. However, as long as the child is younger than you and your spouse, a brother, sister, half sibling, step sibling, niece or nephew may also qualify. A qualifying child must live with you for at least six months out of the year and be younger than age 19 at the end of the tax year.
Calculating the Credit
Once you determine if you qualify to take the credit, you can figure the amount of the credit yourself or have the IRS calculate it for you. Make certain beforehand that you are eligible for the credit before you ask the IRS to do it. If you choose to figure the credit yourself, use the appropriate EIC worksheet and then claim the credit on Form 1040, 1040A or 1040EZ. Use the amount of income on your worksheet to find your credit on the Earned Income Credit table. You will also need your filing status and number of qualifying children to find the amount of your credit. Attach Schedule EIC to your return to give the IRS the information it needs about each qualifying child.
Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.