Tax Guide for Earned Income Credit
The Earned Income Credit (EIC) is a tax credit for certain people who earned income. This “refundable” credit may give you a refund even if you had no tax withholding. In order to claim this credit, you must file an income tax return and qualify by meeting certain rules.
A CREDIT CAN BE AS MUCH AS:
- $464 for earned income and adjusted gross income (AGI) less than $13,660 with no children ($18,740 if married filing jointly)
- $3,094 for earned income and AGI less than $36,052 and one qualifying child ($41,132 if married filing jointly)
- $5,112 for earned income and AGI less than $40,964 and two qualifying children ($46,044 if married filing jointly).
- $5,751 for earned income and AGI less than $43,998 and three or more qualifying children ($49,078 if married filing jointly).
RULES FOR ALL FILERS FOR EIC:
- You must have earned income (wages or self-employment income)
- You (AND your spouse AND any qualifying child) must have a valid Social Security number
- Your filing status cannot be married filing separately
- You must be a U.S. citizen or resident alien all year
- You cannot file Form 2555 or Form 2555-EZ (which excludes foreign earned income)
- Your investment income must be $3,150 or less
ADDITIONAL RULES IF YOU HAVE QUALIFYING CHILDREN:
- Your child must meet the relationship, age and residency tests, and be younger than you
- Your qualifying child cannot be used by more than one person to claim the EIC
- You cannot be a qualifying child of another person
ADDITIONAL RULES IF YOU DON’T HAVE A QUALIFYING CHILD:
- You must be at least age 25, but under age 65
- You cannot be the dependent of another person
- You cannot be a qualifying child of another person
- You must have lived in the United States for more than half the year
QUALIFYING CHILD:
For EIC purposes a qualifying child must meet the relationship, residency, and age test.
Relationship test: The qualifying child must be your son or daughter (including adopted child, stepchild, or eligible foster child), brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of one of these.
An adopted child includes a child lawfully placed with you for legal adoption even if the adoption is not final.
An eligible foster child is any child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
Residency test: The qualifying child must live with you in the U.S. for more than half of the year. A child who was born or died during the year is considered to have lived with you for the entire year if your home was the child’s home for the entire time he or she was alive during the year.
Age test: The qualifying child must be under age 19 at the end of the year and younger than you (or your spouse if filing jointly), or a full-time student under age 24 at the end of the year and younger than you (or your spouse if filing jointly), or, if permanently and totally disabled, can be any age.
EARNED INCOME FOR PURPOSES OF EARNED INCOME CREDIT INCLUDES:
- Wages, salaries and tips
- Union strike benefits
- Taxable long-term disability benefits received before minimum retirement age
- Net earning from self-employment
Liberty Tax® professionals are available for your tax needs. Please call your local Liberty Tax office for further information.
CLIENT CHECKLIST
What to bring to your Liberty Tax client interview:
PERSONAL INFORMATION FOR EACH
FAMILY MEMBER:
o Name
o Date of Birth
o Social Security Card
ALSO:
o Last Year’s Tax Return
o Valid Driver’s License
INCOME AND TAX INFORMATION:
o W-2’s
o Interest (1099-INT or substitute)
o Dividend (1099-DIV or substitute)
o Stock Sales (1099-B or Broker Statement)
o Self-Employment Income (1099-MISC or record of payments)
o Sale of a Personal Residence
o Rental Income
o Sale of any Business Assets
o Gambling or Lottery Winnings
o State Income Tax Refund
o Pension Income (1099-R, RRB-1099, CSA-1099)
o Any Estimated Taxes Paid
o Social Security or Railroad Retirement
o IRA or 401(k) Distribution (1099-R)
o Unemployment Compensation
DEDUCTIONS/ADJUSTMENTS:
o Medical Expenses
o Real Estate and/or Personal Property Taxes
o Mortgage Interest
o Charitable Contributions
o Employee Business Expenses
o Gambling Losses
o Moving Expenses
o Traditional IRA Contributions
o Certain Education Expenses
TAX CREDITS:
o Child Care Provider/Address and Social Security
Number or Employer Identification Number
o Adoption Expenses
o Retirement Savings Contributions