The Earned Income Tax Credit (EITC) is a refundable tax credit on your federal taxes. This means that when the credit amount exceeds your taxes owed, you are refunded the extra amount of the credit. It creates additional income for moderate- and low-income working families. The credit was created in 1975 to help offset the effect of Social Security taxes on paychecks.
Your earned income tax credit will be greater if you have qualifying children. A qualifying child must be younger than the tax filer unless the child is permanently and totally disabled. The qualifying child can't file his own joint return unless it is only to claim a refund by the child and the child's spouse. If the parents of a child can, but do not claim the child as a qualifying child for the earned income tax credit, no one else can either. The only exception would be if the person trying to claim the qualifying child has a higher adjusted gross income than both of the child's parents. If you don't have a qualifying child, then you must be at least 25 years old but under 65 years old and you cannot be claimed as a dependent or qualifying child of anyone else.
You must have a valid Social Security number and be a U.S. citizen or resident alien in order to get any earned income tax credit. You cannot receive a credit if you file your tax forms as married filing separately. You must have earned income, but your investment income must be less than $3,300. Finally, you cannot be filing Form 2555 or Form 2555-EZ. All of these conditions must be met in order to be eligible to receive the earned income tax credit.
Once you meet the eligibility requirements and determine how many qualifying children you have, you will be able to determine the amount of your earned income tax credit. In order to get the credit, you will need to file a Form 1040 tax form. You will determine your adjusted gross income when filling out this form and your earned income tax credit will be based on your adjusted gross income. In 2013, the income limits were: $46,227 ($51,567 married filing jointly) with three or more qualifying children; $43,038 ($48,378 married filing jointly) with two qualifying children; $37,870 ($43,210 married filing jointly) with one qualifying child and $14,340 ($19,680 married filing jointly) with no qualifying children.
In 2013, the maximum earned income tax credits were: $6,044 with three or more qualifying children; $5,372 with two qualifying children; $3,250 with one qualifying child and $487 with no qualifying children . The more your adjusted gross income is below the income limit for your number of qualifying children, the closer your credit amount will be to the maximum amount.
- Internal Revenue Service: EITC Income Limits, Maximum Credit Amounts and Tax Law Updates
- Internal Revenue Service: Publication 596 -- Introductory Material
- Internal Revenue Service: EITC Home Page -- It’s Easier Than Ever to Find Out If You Qualify for EITC
- Internal Revenue Service: Qualifying Child Rules