The Earned Income Tax Credit (EITC) may reduce your tax liability and provide you with a refund of up to $6,728 at tax time.
The Earned Income Tax Credit (EITC) is a tax credit that may either give you money back or reduce the amount of federal taxes you owe. You may apply for the credit whether you are single or married, whether you have children or not. The essential criterion is that you have a job that pays well.
The credit may be used to offset any federal tax liability you may have at tax time. If the EITC amount exceeds what you owe in taxes, the difference is refunded to you in the form of a tax refund. Even if you do not owe income tax, if you qualify for the credit, you may be eligible for a refund.
In addition to the federal EITC, 29 states and the District of Columbia have implemented state EITCs. Look at the state EITC map to determine whether your state provides a tax credit.
How much money can I collect from the EITC?
The amount of the credit is determined by your income, marital status, and family size. The credit is worth up to $6,728 in 2021. The credit amount increases in proportion to earned income until it reaches a limit, at which point it progressively fades out. Families with additional children qualify for larger credit amounts.
If your investment income exceeds $10,000 in 2021, you will be ineligible for the EITC. Taxable interest, tax-exempt interest, and capital gain distributions are all examples of investment income. Try the EITC calculator here.
To be eligible for the EITC, you must meet three major criteria:
Income: You must work and earn money. Your task does not have to be done all year. Your earnings, including investment income, cannot exceed the sums shown in the figure above. Wages, salary, tips, employer-based disability, self-employment income, military pay, or union strike benefits are all examples of earned income.
Taxpayer Identification Number: You must have Social Security numbers that allow you to work for yourself, your spouse, and any children who are eligible for the EITC table amount. If you have a Social Security Number, you do not need to be a citizen to claim the EITC. If you submit your taxes using an ITIN, you cannot receive the federal EITC. Please see Tax Filing with Immigrant or DACA Status for more information. If you reside in California, Colorado, Maine, Maryland, or New Mexico and have an ITIN, you may be eligible for the state EITC.
What is a Qualifying Child: If you want to claim the EITC for your children, they must be "qualifying children." Details are provided below.
Some persons must meet additional conditions in order to claim the EITC:
<!-- [if !supportLists]-->· <!--[endif]-->If you are not claiming children, you must be at least 19 years old.
<!-- [if !supportLists]-->· <!--[endif]-->You are unable to file as married filing separately.
There are exceptions for both.
Is my child eligible for the EITC?
If you claim children as part of your EITC, they must meet three criteria in order to be considered a "qualifying child":
Relationship: The kid must be your son, daughter, grandchild, stepchild, or adopted child; a younger sibling, step-sibling, half-sibling, or descendant of these people; or a foster child placed with you by a government agency.
Age: The kid must be under the age of 19, under the age of 24 if enrolled full-time, or any age if completely and permanently incapacitated.
Residency: The kid must spend more than half of the year with you in the United States. Living together does not have to be in a straight line.
How can I apply for the EITC?
You must submit a tax return to claim the EITC. If you are claiming the EITC for a child, you must additionally file "Schedule EIC," when you file your taxes.