The Earned Income Tax Credit, or EITC, is a tax benefit for low income individuals and families, which aims to provide extra financial support. Qualifications and the size of the benefit depend on how much the taxpayer earns, what type of income he receives, how many children he cares for and his marital status.
Determine if you have earned income. Earned income is any taxable income you get from working. The two ways to get income is from working for someone who pays you or working in a business you own. Income that you receive from interest, pensions and social security are not considered earned income. An exception to this rule is if you have a disability and receive disability retirement benefits. If this is the case, those benefits are earned income until you reach minimum retirement age, at which point those benefits are no longer considered earned income. If you have no earned income, you do not qualify for the tax credit.
Determine if your income is under the EITC Income limits. Households that earn more than a certain amount of money are not eligible for the EITC. At the time of publication, the limits range from $13,660 for a person filing separately with no qualifying children to $49,078 for a couple filing jointly with three or more qualified children. Also, your investment income must be $3,150 or less for the year.
Assess whether your child, if you have one, meets the EITC Criteria. Your child must have a valid Social Security number, and must also be your son, daughter, adopted child, stepchild, foster child, brother, sister or grandchild. The child must be younger than you, and either under the age of 19, younger than 24 and a full-time student, or disabled. The child must have lived with you in the U.S. for more than half a year. If you have earned income less than the tax year's limitation for your particular situation, you qualify for EITC.
Determine if you qualify based on workers rules if you don't have a child. You, and your spouse if married, must have lived in the U.S. for more than half the tax year. Either you or your spouse must be between the ages of 25 and 65. Finally, you and your spouse cannot qualify as someone else's dependent. If you meet these criteria and have earned income less than the tax year's limitation for your particular situation, you qualify for EITC.
At the time of publication, the maximum credit for the EITC is $5751 for someone with three or more qualifying children; $5112 for two children; $3094 for one qualifying child; and $464 for no qualifying children.
For complex returns, consult with a tax professional, such as a certified public accountant or licensed attorney, as they can best address your individual needs. If you are in financial need, but still need tax preparation aid, consider finding a nearby low income taxpayer clinic or legal aid service to help meet your needs. Keep your tax records for at least seven years to protect against the possibility of future audits.