Earned Income Tax Credit

  • The Earned Income Tax Credit (EITC or EIC) is a tax credit available to certain individuals that help keep more of your hard-earned pay in your pockets. This “refundable” credit may give you a refund even if you had no tax withholding. Below is a breakdown of the credit in less confusing terms. You can also use the IRS’s EITC Assistant tool available in both English and Spanish to determine if you qualify for the credit for the 2013 tax year.

     

    Do I qualify for EITC?

    The first step in determining if you qualify for the credit is that you must meet the following EITC rules for everyone: 

    • have a Social Security Number valid for employment
    • have some form of earned income through employment, self-employment, or another source, (this can include wages, salaries, tips, union strike benefits, taxable long-term disability benefits received before minimum retirement age, and net earnings from self-employment)
    • be a U.S. citizen or resident alien all year
    • not file as married filing separate
    • be a U.S. citizen or resident alien all year OR be a nonresident alien married to a U.S. citizen or resident alien, file a joint return and choose to be treated as a resident alien
    • not be the qualifying child of another person
    • not file Form 2555 or 2555-EZ
    • meet the adjusted gross income limits for 2013, which can be found below
    • have an investment income of $3,300 or less for the year

     

    After meeting the rules for everyone, you must then either meet the rules for workers without a qualifying child or workers with a qualifying child.

    For workers without a qualifying child, the following applies:

    • you (and your spouse, if filing a joint return) must have lived in the U.S. for more than half the year
    • either you or your spouse must be at least age 25 but younger than 65
    • you nor your spouse can be the dependent or qualifying child of another person

     

    For workers with a qualifying child, the following applies:

    • your child must meet the relationship, age, residency and joint return tests as outlined below, and be younger than you
    • your child cannot be used by more than one person to claim the EITC (read more about this scenario)
    • you nor your spouse can be the dependent or qualifying child of another person

     

    For credit purposes, a qualifying child has to meet the following criteria:

    • Relationship. The child must be a son, daughter, stepchild, adopted child, foster child, or grandchild. They can also be a sibling, stepsibling, or niece or nephew.
    • Age. The child must be under 19 at the end of the year and younger than you (or your spouse if filing jointly), under age 24 if a full-time student and is younger than you (or your spouse if filing jointly), or any age if permanently and totally disabled.
    • Residency. The child must have lived with you for more than half of the year.
    • Joint Return. The child cannot file a joint return.  A joint return can only be filed by the child and his or her spouse for the sole purpose of receiving a refund of income tax withheld or estimated tax paid.


    How do I claim the credit?

    In order to claim the credit, not only do you have to meet the above tests, but you also have to file a tax return. The credit can be claimed on tax returns that have not yet been filed for previous tax years starting with 2010. The IRS website goes into detail about how you can claim EITC for prior tax years and important deadlines. You can also view IRS Publication 596, Earned Income Credit (EIC) for more information.


    What are the AGI limits and maximum credit amounts for the current tax year?

    For 2013, earned income and AGI must be less than:

    • $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
    • $14,340 ($19,680 married filing jointly) with no qualifying children

     

    The maximum credit that can be received for the 2013 tax year is as follows:

    • $6,044 with three or more qualifying children
    • $5,372 with two qualifying children
    • $3,250 with one qualifying child
    • $487 with no qualifying children


    Refer to our Tax Glossary for a complete list of definitions and explanations of commonly used tax terms.

    Updated for 2013 Tax Year