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What Is the Earned Income Credit?
 
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FEDERAL EARNED INCOME CREDIT (EIC)

Earned Income Credit: Am I Eligible?


Am I eligible for the federal Earned Income Credit (EIC)?

What are the EIC income limits?

Who is a qualifying child?

What are the additional rules for workers with a qualifying child?

What are the additional rules for workers without a qualifying child?

What is the EITC Assistant?


NOTE: Glossary words are highlighted. Click on any glossary word to see its definition.

Am I eligible for the federal Earned Income Credit (EIC)?

The Earned Income Credit (EIC) is a tax credit for low and moderate income people who work and have earned income. There are additional eligibility rules for workers with a qualifying child, and workers without a qualifying child.

Note: You can use the IRS EITC Assistant to check your EITC eligibility and calculate your credit amount.

To be eligible for the federal EIC, you must meet all of the following eligibility requirements:

  • Earned income: You must have worked during the tax year and have earned income. If you are married filing jointly, you meet this requirement if at least one spouse has earned income.

    Note: Earned income includes wages, salaries, tips, and net earnings from self-employment. Income that is not earned income includes cash assistance from TAFDC, SSI and Social Security, child support or alimony, workers' compensation, unemployment insurance, foster care payments, and interest and dividend income.

  • Income limits: Your adjusted gross income (AGI) must be less than the Earned Income Credit AGI limits. See EIC income limits below.
     
  • Filing status: Your tax filing status cannot be Married Filing Separately. In most cases, if you are married, you must file a joint return with your spouse.

    Note: If you are married and your spouse did not live with you during the last 6 months of the year in which you are filing your taxes, you may be able to file as Head of Household and still be eligible for the EIC.

  • Social Security number: You must have a valid Social Security number (SSN). If you file a joint tax return with your spouse, your spouse must also have a valid SSN. If you have a qualifying child, that child must also have a valid SSN.
     
  • U.S. citizen or resident alien: You (and your spouse, if married) must be a U.S. citizen or a resident alien in the year for which you apply for the EIC. If one spouse was a nonresident alien for any part of the year, you can meet this requirement if you file jointly, choose to treat the nonresident spouse as a U.S. resident, and pay taxes on your worldwide income. 
     
  • Investment income limit: Your investment income must be less than the EIC investment income limit for the year. For tax year 2012, the limit is $3200. 
     
  • Foreign income: You cannot file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion.
     
  • Additional rules: You must either meet the additional rules for workers with a qualifying child or meet the additional rules for workers without a qualifying child.

The IRS web site has a complete explanation of Earned Income Tax Credit rules.


What are the EIC income limits?

The Earned Income Credit income limits depend on the number of qualifying children that you have. Workers with three or more qualifying children have the highest income limits. Workers with no qualifying children have the lowest income limits.

For tax year 2012, your earned income and adjusted gross income must be less than the following:

Earned Income Credit Income Limits
Tax year 2012
Number of
qualifying children
Single /
Head of household
Married
filing jointly
none $13,980 $19,190
one $36,920 $42,130
two $41,952 $47,162
three or more $45,060 $50,270

Adjusted gross income is gross income minus certain specific deductions allowed by the IRS. Adjusted gross income is the number that appears on line 38 of Form 1040, line 22 of Form 1040A, or line 4 of Form 1040EZ. See your tax form for details.


Who is a qualifying child?

The amount of Earned Income Credit you can get depends on the number of qualifying children you have. Workers with three or more qualifying children can get the largest credit. Workers with no qualifying children get a much lower EIC.

A child is a qualifying child for the Earned Income Tax Credit if the child meets the following eligibility requirements:

  • Relationship: The child must be:
    • your son, daughter, stepchild, foster child, or a descendant of any of them (such as a grandchild)
    • or your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (such as a niece or nephew) 
       
  • Age: The child must be:
    • under age 19 and younger than you (or younger than your spouse, if filing jointly) at the end of the year in which you are filing your tax return
    • or a full-time student under age 24 and younger than you (or younger than your spouse, if filing jointly) at the end of the year in which you are filing your tax return
    • or permanently and totally disabled at any time during the tax year
       
  • Residency: The child must have lived with you in the United States for more than half of the tax year.

    Note: The United States includes the 50 states and the District of Columbia, but not Puerto Rico or U.S. possessions. Your home can be a homeless shelter or other non-traditional home. Living on a military base stationed outside of the United States counts as living in the U.S. Other notes about the residency test are in the tax form instructions.

  • Filing status: The child cannot file a joint tax return for the year in which you are claiming him/her as a qualifying child. Exception: If your child is married and files a joint return only to claim a refund, you can still claim the child as a qualifying child.
     
  • Not married: A married child cannot be a qualifying child unless:
    • you can claim an exemption for the child
    • or you cannot claim an exemption only because you let the child's other parent claim the exemption
       
  • Social Security number: The child must have a valid Social Security number (unless the child was born and died during the tax year).

For details about requirements for a qualifying child, see Publication 596 Earned Income Credit on the IRS web site.


What are the additional rules for workers with a qualifying child?

The following additional EIC rules apply to workers with a qualifying child:

  • If the child meets the requirements to be a qualifying child for more than one person, only one person may claim that child as a qualifying child for tax benefits. You and the other person cannot divide the benefits. The IRS has a set of tiebreaker rules to decide which person gets to claim the qualifying child and get the tax benefits.
     
  • If you (or your spouse, if filing jointly) are the qualifying child of another person, you are not eligible for the Earned Income Credit. It does not matter if the other person actually claims the EIC. If you meet the requirements to be claimed as a qualifying child, you cannot get the EIC.

For details about rules for workers with a qualifying child, see Publication 596 Earned Income Credit on the IRS web site.


What are the additional rules for workers without a qualifying child?

The following additional EIC rules apply to workers without a qualifying child:

  • You must be at least 25 years old but under age 65 at the end of the tax year. If you are married filing jointly, either you or your spouse must be at least age 25 but under age 65. 
     
  • If you (or your spouse, if filing jointly) are the dependent of another person, you are not eligible for the Earned Income Credit. It does not matter if the other person actually claims you (or your spouse) as a dependent on their tax return. If you meet the requirements to be claimed as a dependent, you cannot get the EIC. 
     
  • If you (or your spouse, if filing jointly) are the qualifying child of another person, you are not eligible for the Earned Income Credit. It does not matter if the other person actually claims you as a qualifying child to get the EIC. If you meet the requirements to be claimed as a qualifying child, you cannot get the EIC. 
     
  • You (and your spouse, if filing jointly) must have lived in the United States for more than half of the tax year.

    Note: The United States includes the 50 states and the District of Columbia, but not Puerto Rico or U.S. possessions. Your home can be a homeless shelter or other non-traditional home. Living on a military base stationed outside of the United States counts as living in the U.S. Other notes about the residency test are in the tax form instructions.

For details about rules for workers without a qualifying child, see Publication 596 Earned Income Credit on the IRS web site.


What is the EITC Assistant?

The EITC Assistant is a tool from the Internal Revenue Service (IRS) that lets you check your eligibility for the Earned Income Tax Credit (EITC) and helps you calculate the amount of your credit. The EITC Assistant is available on the IRS web site at:

The EITC asks a short series of questions about your tax filing status, your income, qualifying children, and other factors, to determine your eligibility for the EIC. If the Assistant finds that you are eligible, it asks more specific questions about your income and deductions to estimate your tax credit amount.

The EITC Assistant is available in English and Spanish.

 
 
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