Menu 
Share Button

Earned Income Credit (EIC)


What is EITC, Earned Income Tax Credit?

EITC, Earned Income Tax Credit, is a benefit for working people who have low to moderate income. A tax credit means more money in your pocket. It reduces the amount of tax you owe and may also give you a refund.

If you qualify for EITC, you have to file a tax return with the IRS, even if you owe no tax or are not required to file.


2012 Tax Year

Earned Income and adjusted gross income (AGI) must each be less than:

  • $45,060 ($50,270 married filing jointly) with three or more qualifying children
  • $41,952 ($47,162 married filing jointly) with two qualifying children
  • $36,920 ($42,130 married filing jointly) with one qualifying child
  • $13,980 ($19,190 married filing jointly) with no qualifying children

Tax Year 2012 maximum credit:

  • $5,891 with three or more qualifying children
  • $5,236 with two qualifying children
  • $3,169 with one qualifying child
  • $475 with no qualifying children

Investment income must be $3,200 or less for the year.


Who can claim the credit and if I qualify, how do I get it?

To claim EITC on your tax return, you must meet all the following rules:

  • You, your spouse (if you file a joint return), and all others listed on Schedule EIC, must have a Social Security number that is valid for employment
  • You must have earned income from working for someone else or running or operating a farm or business
  • Your filing status cannot be married filing separately
  • You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return
  • You cannot be a qualifying child of another person
  • You cannot file Form 2555 – Foreign Earned Income or Form 2555 EZ (related to foreign earned income)
  • You must meet the earned income, AGI and investment income limits (income limits change each year)
  • And you must meet one of the following:
    • Have a qualifying child
    • If you do not have a qualifying child, you must:
      • be age 25 but under 65 at the end of the year,
      • live in the United States for more than half the year, and
      • not qualify as a dependent of another person.

What is Earned Income?

Earned income includes all the taxable income and wages you get from working for someone else or you own or run a business or farm.

Taxable earned income also includes:

  • Wages, salaries, and tips
  • Union strike benefits
  • Certain disability benefits received before you reach minimum retirement age
  • Net earnings from self-employment

Forms

Schedule EIC
2555 – Foreign Earned Income
EIC – Q & A
EIC – Q & A Spanish
Publication 596 – Earned Income Credit

Share Button