Do you qualify for the Earned Income Tax Credit?

Many low-income families carefully review their tax documents during filing season to ensure they have claimed all the deductions and credits for which they are eligible. Despite this careful planning, the Internal Revenue Service notes that many families who qualify for the Earned Income Tax Credit fail to claim it on their taxes, leading to a potential loss of hundreds or thousands in their refunds. 

This year, the IRS released a statement urging working families to determine if they qualify for the benefit. 

"About a third of the people eligible for EITC changes every year, probably because they get a job or lose one, have a child or change their marital status," Christopher Miller, IRS spokesman for Wisconsin, told the Wisconsin Journal Sentinel. "This changing population of people who are eligible is why it's so important to raise new awareness every year."

Clay Sanford, IRS spokesman in Dallas, said that a number of families fail to receive the benefit because they may be unaware of the eligibility rules, fail to claim the benefit or don't file their income taxes. 

“Although an estimated 4 out of 5 eligible workers and families get the credit, 1 in 5 still miss out on it," Sanford told the Dallas News. 

Qualifying for the EITC
​The benefit applies to low- or moderate-income individuals, and in order to qualify, taxpayers must meet certain income thresholds. To be eligible for the EITC, both earned income and adjusted gross income (AGI) must each be less than $13,980 for singles with no qualifying children, or $19,190 for married couples filing jointly. It's also important for married taxpayers to remember that they must file joint returns in order to claim the credit. These thresholds increase to $36,920 for singles and $42,130 for joint filers with one qualifying child. Those with two qualifying children must bring in less than $41,952 for singles and $47,162 for married couples to be eligible. Lastly, singles with three or more qualifying children must have earned income and AGI of less than $45,060 or $50,270 if married. 

The maximum credits for the 2012 tax year are as follows: $475 with no qualifying children; $3,169 with one qualifying child; $5,236 with two qualifying children and $5,891 with three or more qualifying children. 

Individuals who meet these thresholds, but still have questions about their eligibility should speak with their tax preparer. In addition, it's important to determine eligibility each year as a household's financial circumstances, marital status and family size changes.