EITC, short for “earned income tax credit,” is a tax benefit available to lower- and middle-income workers. It’s designed to offset the burden of federal income taxes on people who work for a wage. In 2019, the EITC amount is up to $2,156. (The value of the credit is adjusted each year based on inflation.) Workers who have no children and earn less than $66,100 can claim the EITC. Married couples can claim the credit if they earn less than $133,100. Parents who maintain custody of their children can get the same credit for them as non-parents.
What does EITC Stand for?
The Earned Income Tax Credit (EITC) is a refundable tax credit for low- and moderate-income working people. The credit reduces the amount of taxes owed and is based on the amount of earned income.
What is Earned Income Credit (EIC)?
The Earned Income Credit is a tax credit for low- and moderate-income working people. The credit is based on the amount of income earned and the number of children in the household. EIC reduces the amount of tax you owe, and in some cases, it may result in a refund. There are special rules for couples where both spouses work. You can claim EIC if you do not have a child and are age 25 to 65.
In 2019, the maximum amount of EIC is $2,060 for families with children and $3,560 for two-parent families with children.
What are the Basic Qualifying Rules for the EITC?
The basic qualifying rules for the Earned Income Tax Credit (EITC) are as follows:
The earned income and adjusted gross income (AGI) must be less than:
- $51,567 ($56,844 married filing jointly) with three or more qualifying children
- $47,447 ($52,744 married filing jointly) with two qualifying children
- $41,131 ($46,884 married filing jointly) with one qualifying child
- $15,010 ($20,600 married filing jointly) with no qualifying children
- The tax filer must have a valid Social Security Number that is issued by the Social Security Administration.
- The tax filer must have earned income from employment, self- employment, or using their own personal equipment and labor in a trade or business.
- The tax filer must be at least 17 years old.
Are there Other Rules?
Yes. The taxpayer must also meet the qualifying child(ren) rules for the additional child tax credit. If the taxpayer has a qualifying child, they do not need to meet the criteria above because the EITC is based on household size, not earned income. However, the qualifying child must also meet all of the following rules:
• Is your age
• Does not file a joint tax return (unless living apart from the taxpayer’s parent)
• Is claimed as a dependent on someone else’s tax return
• Is a U.S. citizen, U.S. national, or resident alien
• Has a valid Social Security Number
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