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Earned income credit is a tax credit targeted at low income families to help them ease their tax burden. To qualify for the earned income credit, you must:
- Have earned income during the year as an employee or a contractor (self-employed)
- If you are married, you must be filing jointly
- You must be a U.S. citizen or resident alien
- You cannot be the qualifying child of another filer
You may be eligible for the earned income credit even if you do not have a child, if you did work during the tax year and are between the ages of 25 and 65. If you have no children, you must have earned less than $13,440.
Income limits for families with children depend on the number of qualifying children (children, stepchildren, adopted children, and foster children) that you have in your household. Families with one child can have income of up to $35,463 ($38583 for those who are married and filing jointly) and for families with two or more children, you can earn up to $40,295 ($43,415 for married filing jointly).
To file to receive the earned income credit, you must complete form 1040 and schedule EIC. Schedule EIC is the form that determines how much earned income credit you are eligible to receive. The form will require you to provide the qualifying child's (or children's) names, social security numbers, and years of birth. Regardless of how many qualifying children you have, only two can be listed for the purposes of Schedule EIC. Children must be under 18 and living at home full time or up to age 24 if they are full time students or disabled.
You must then indicate the child's relationship to you. Qualifying children must be related U.S. citizens. Step children, adopted children, and foster children do qualify. You will be required to indicate how many months out of the year the child lived with you. If the child resided in your home for the entire year or died while residing in your home during the year, you would enter 12. The child must have lived with you for at least half the year (6 months) in order for you to be eligible for the credit.
The amount of earned income credit you receive will depend on your income and adjusted gross income. It will also be reduced by any advanced earned income credit payments you have received during the year. The maximum credit for which you are eligible is:
- $458 for earned income and adjusted gross income (AGI) less than $13,440 with no children ($18,440 if married filing jointly)
- $3,043 for earned income and AGI less than $35,463 and one qualifying child ($40,463 if married filing jointly)
- $5,028 for earned income and AGI less than $40,295 and two qualifying children ($45,295 if married filing jointly)
- $5,657 for earned income and AGI less than $43,279 and three or more qualifying children ($48,279 if married filing jointly)
Earned income credit will not, in most cases, count against your ability to remain eligible for food stamps or temporary assistance to needy families.
