Earned Income Tax Credit
The Earned Income Tax Credit, EITC or EIC, is a benefit for working people with low to moderate income. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file. EITC reduces the amount of tax you owe and may give you a refund.
The new tax law didn’t change the earned income tax credit. However, the earned income amounts and phase-out amounts are adjusted annually for inflation.
The earned income tax credit (EITC) is a tax credit for individuals who work and whose earned income is within a certain range. You must meet certain eligibility rules to claim and receive the credit:
- File a tax return even if you generally aren’t required to do so;
- Have earned income within a certain range for your filing status, and
- Either have at least one qualifying child or meet the requirements for workers without a qualifying child.
You, your spouse (if applicable), and all listed qualifying children must have social security numbers. In addition, you aren’t eligible for the credit if your filing status is married filing separately. The amount of the credit depends on your earned income, filing status, whether you have any qualifying children.
The IRS offers an application, EITC Assistant, that can assist you in determining if you are eligible for the credit and estimating the amount of your credit. The application is available in English and Versión en Español. You can use the EITC Assistant for the current tax year or for prior years.
The new tax law didn’t change the earned income tax credit. However, the earned income amounts and phase-out amounts are adjusted annually for inflation.
How will this affect me?
Anthony and Addison are married and plan to file separate 2018 tax returns. They both live in the same residence and fully support their children who are qualifying children. Even if their earned income falls within the range for the credit, Anthony and Addison can’t claim the EITC on their 2018 tax returns because of their married filing separate status.
Same as above, except Anthony and Addison married filing joint tax return. In addition, their children are foster children who were placed in their house on March 15, 2018 and remained throughout the year. Foster children meet the relationship test for a qualifying child. Assuming the children meet all the requirements to be qualifying children, and their earned income falls with the allowable range for EITC, they’ll be eligible to claim the EITC on their 2018 joint tax return.