Rules For The Earned Income Credit

The Earned Income Credit (EIC)

The Earned Income Credit (EIC) is a refundable credit for low-income taxpayers who may or may not have a qualifying child. The EIC is is directly subtracted from your total tax, and it can be refunded even if you have no tax liability.

Here are the Adjusted Gross Income (AGI) limits to qualify for the EIC:

• $37,783 ($39,783 for married filing jointly) if you have more than one qualifying child,

• $33,241 ($35,241 for married filing jointly) if you have one qualifying child, or

• $12,590 ($14,590 for married filing jointly) if you do not have a qualifying child.

Rules For A Qualifying Child

Here are the rules for the EIC:

1.) You must have earned income. If you file Married Filing Jointly (MFJ), this rule is met if you or your spouse have earned income.

2.) Your earned income and AGI must be under the limits posted above.

3.) You cannot be the qualifying child of another person.

4.) You must have a Social Security number that allows you to work.

5.) The Social Security number of each person you claim as your qualifying child must be included on Schedule EIC.

6.) Your qualifying child or children must have lived with you in the U.S. for at least half of the year. If you are in the military and on extended leave outside of the U.S. are considered to be in the U.S. during the duty period.

7.) You cannot file Forms 2555 or 2555-EZ, which are for foreign earned income.

8.) You must be a U.S. citizen or resident alien the entire year.

9.) You cannot have more than $2,900 in investment income. This includes interest, dividends, net income from rent, net capital gains, and net passive income that is not self-employment income.

To qualify for the EIC, you must meet all of these requirements. Even if you are not required to file, you still could qualify for the EIC. To get the credit though, you must file a return.

Tim