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Earned Income Tax Credit: Know If You Qualify

In general, the less you earn, the larger the credit. And families with children often qualify for the largest credits.
November 25, 2017
Income Taxes, Personal Taxes, Taxes
Can You Take the Earned Income Tax Credit
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The Earned Income Tax Credit (EITC) doesn’t just cut the amount of tax you owe — it could score you a refund, and in some cases a refund that’s more than what you actually paid in taxes. Don’t miss out! One out of five eligible workers fails to claim the EITC, and they could be losing out on hundreds or even thousands of dollars.

What is the Earned Income Tax Credit?

The EITC is a tax credit intended to reduce or eliminate the tax paid by low- and moderate-income wage earners. In 2017, 26 million taxpayers claimed more than $63 billion in EITC, averaging $2,470 per return.

If you fall within the guidelines for the credit, be sure to claim it on your 2017 return when you do your taxes in 2018. And if you didn’t claim the credit when you filed your 2014, 2015 or 2016 taxes but you think you qualified for it, the IRS encourages you to let it know so you can get that money back.

How much can I get?

In general, the less you earn, the larger the credit. Typically families with children qualify for the largest credits, although you don’t have to have a child in order to claim the EITC.

One out of five eligible workers fails to claim the EITC.

Both your earned income and your adjusted gross income have to be below certain levels that are based on your filing status and the number of qualified children you’re claiming (from none to three or more).

Your earned income usually includes job wages, salary, tips and other taxable pay you get from your employer. Your adjusted gross income is your earned income minus certain deductions.

Below are the maximum EITC available for the 2017 tax year, plus the max you can earn before losing the benefit altogether.

2017 Tax Year Earned Income Tax Credit

Number of children you claimMax earnings
single filers can have
Max earnings
married filers can have
Max EITC credit you can get
0$15,010$20,600$510
1$39,617$45,207$3,400
2$45,007$50,597$5,616
3 or more$48,340$53,930$6,318

Who qualifies for the EITC?

Besides staying below the income thresholds noted above, there are other rules.

  • You must have at least $1 of earned income (pensions and unemployment don’t count).
  • Your 2017 investment income must be $3,450 or less.
  • You can’t claim EITC if you’re married filing separately.
  • You must not file Form 2555, Foreign Earned Income; or Form 2555-EZ, Foreign Earned Income Exclusion.

There are special rules for members of the military and the clergy, as well as for people who have disability income or who have children with disabilities.

Kids and the EITC

If you claim one or more children as part of your earned income credit, each must pass certain tests to qualify:

  • The child can be your son, daughter, adopted child, stepchild, foster child or grandchild. The child also can be your brother, sister, half-brother or half-sister, stepbrother or stepsister or any of their children (your niece or nephew).
  • The child must be under 19 at the end of the year and younger than you or your spouse if you’re filing jointly, OR the child must be under 24 if he or she was a full-time student in at least five months of the year. There’s no age limit for kids who are permanently and totally disabled.
  • The child must have lived with you or your spouse in the United States for more than half the year.

For each child you’re claiming, you’ll also need:

  • A Social Security number (be sure to use the child’s name and Social Security number exactly as they appear on the Social Security card)
  • His or her birthdate

If you don’t have kids

You may be able to get the EITC if you don’t have a qualifying child but meet the income requirements for your filing status. To qualify, you must meet three more conditions:

  1. You must have resided in the United States for more than half the year.
  2. No one can claim you as a dependent or qualifying child on his or her tax return.
  3. You must be at least 25 but under 65 at the end of the year.

Consequences of an EITC-related error

Not only does an error on your tax form delay the EITC part of your refund — sometimes for several months — but it also means the IRS could deny the entire credit.

If the IRS denies your whole EITC claim:

  • You must pay back any EITC amount you’ve been paid in error, plus interest.
  • You might need to file Form 8862, “Information to Claim Earned Income Credit After Disallowance,” before you can claim the EITC again.
  • You could be banned from claiming EITC for the next two years if the IRS finds you filed your return with “reckless or intentional disregard of the rules.”
  • You could be banned from claiming EITC for the next 10 years if the IRS finds you filed your return fraudulently.

Most online tax software walks you through the EITC with a series of interview questions, greatly simplifying the process. (Plus, if you qualify for the EITC, you might be able to get free tax software.) But remember: Even if someone else prepares your return for you, the IRS holds you responsible for all information on any return you submit.

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