Can the Earned Income Tax Credit Help You?

The Internal Revenue Service (IRS) has various tax credits that taxpayers can use.  A tax credit is an amount deducted from the total income tax that a taxpayer owes.  Some tax credits are refundable, which means that if the refundable tax credits exceed the amount of tax owed, the taxpayer can actually receive a refund.

One of the more well known tax credits is the Earned Income Tax Credit.  What is this tax credit and who qualifies for it?  Read on to learn more about this tax credit and if it can help you.

What is the Earned Income Tax Credit?

The Earned Income Tax Credit, or EITC, is a tax credit designed to reduce the tax burden on certain low- and middle-income earners who file federal income tax.  The EITC was passed by Congress in 1975 to help offset Social Security Tax.

Who qualifies for the Earned Income Tax Credit?

There are several primary tests a taxpayer must pass to qualify for the Earned Income Tax Credit.  First, the taxpayer must have income from one of the following sources:

  • Work for an employer
  • Work as a self-employed individual
  • A business or farm that you own
  • A disability plan

Second, you generally must have a qualifying child.  A qualifying child is one who meets all of the following tests:

  • Relationship.  You must have a child by birth, adoption, is a step child, or is a foster child, or who is a child of any of the above.  Alternatively, you must have a child who is a descendant of your full, half, or step siblings.
  • Age.  At the end of the tax year, your child must be younger than you and either under the age of 24 if a full-time student or under the age of 19.  Alternatively, there is no age requirement if the child is permanently and totally disabled.
  • Residency.  The child must have lived with you in the United States for more than half of the tax year.
  • Joint Return.  The child cannot file a joint return for the tax year unless the return was filed only so the child could receive a tax refund.

Finally, you must also meet the following requirements:

  • Not be the qualifying child for someone else as defined by the four tests above
  • Have a valid Social Security Number
  • Not use the married filing separately filing status
  • Be a citizen of the United States, a resident alien for the entire tax year, or a non-resident alien married to a citizen of the United States or a resident alien
  • Not use tax Forms 2555 or 2555-EZ related to a foreign income tax credit
  • Have income, adjusted gross income, and investment income below the defined thresholds

Earned Income and adjusted gross income (AGI) must each be less than:

  • $45,060 ($50,270 married filing jointly) when you have three or more qualifying children
  • $41,952 ($47,162 married filing jointly) when you have two qualifying children
  • $36,920 ($42,130 married filing jointly) when you have one qualifying child

Investment income must be $3,200 or less for the tax year.

How can I get help with the Earned Income Tax Credit?

If you need help determining if you qualify for the Earned Income Tax Credit or you have other questions about your federal income tax, please enter your information on the form located on this page.  A tax attorney who is a professional in federal income tax law and is on your side will get in touch with you to answer all of your questions.

You can have an initial conversation with a tax attorney free of charge and with no further obligation to you.  So you have every reason to get the tax help you need today.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.