Earned Income Tax Credit EITC

The Earned Income Tax Credit (EITC) is a credit for taxpayers who earn low to moderate incomes. EITC can reduce your taxes, and can mean a refund. Meaning more working families and individuals may keep more of what they work for.

President Obama’s stimulus bill includes provisions that qualify more taxpayers for ETIC, so even if you didn’t qualify for the credit last year, you might be able to claim it this year. The credit begins to phase out at $12,470 for married filing jointly couples with no children, and at $21,420 for married filing jointly couples with children, and it phases out entirely for taxpayers with both earned income and adjusted gross income of: 

• $13,440 with no qualifying children ($18,440 married filing jointly)
• $35,463 with one qualifying child ($40,463 married filing jointly)
• $40,295 with two qualifying children ($45,295 married filing jointly)
• $43,279 with three or more qualifying children (48,279 married filing jointly)

The maximum EITC per taxpayer is:

• $457 with no qualifying child
• $3,043 with one qualifying child
• $5,028 with two qualifying children
• $5,657 with three or more qualifying children

To quality for EITC you also must meet a number of other requirements, including:

• You must have a valid Social Security number and have earned income from employment or self-employment.
• Your filing status cannot be married filing separately.
• You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
• You cannot be a qualifying child of another person.
• If you do not have a qualifying child, you must:
  • be older than 25 but younger than 65 at the end of the year
  • live in the United States for more than half the year
  • not qualify as a dependent of another person.
• You cannot file Form 2555 or 2555-EZ (related to foreign earned income).
• Your investment income for the year must be less than $3,100.

Find out whether a child qualifies you for EITC: Publication 596, Rules If You Have A Qualifying Child