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No one will argue with getting a bigger tax refund, and the Earned Income Credit can help you do exactly that. If you qualify, you can reduce your tax burden by up to $6,660.
Read on for more information on who can get the credit and how to apply.
What is Earned Income Credit?
The Earned Income Tax Credit (EITC or EIC) benefits low- to moderate-income folks by potentially lowering their taxes. If you qualify, you can get a tax refund, which means more money in your pocket.
To get an EIC, you have to file a tax return and meet other requirements that we cover below.
Who qualifies for the EIC?
There are a few basic requirements you have to hit to be in the running for an EIC:
- You must have a Social Security number.
- You usually have to be a U.S. citizen or resident alien for the full year.
- You have to be between the ages of 25 and 65, or have a qualifying child.
- You can’t be married but file taxes separately.
- You can’t be a dependent on someone else’s tax forms.
What else matters
Whether or not you qualify from there depends on your filing status (married or single), how much money you made in the previous year, and how many children you have, if any.
Your tax filing status
Make sure to file your taxes in a way that allows you to receive the EIC. If you’re not married, you’ll file your taxes as single.
Or you may file as the head of household, which means you pay for more than half of the expenses to support any dependent(s). You can also file as a widow or widower.
If you’re married, you can choose to either file together, which is called jointly, or you can file separately. However, you can only get the EIC when you’re married if you choose to file jointly, so keep that in mind when you put together your taxes.
How many children you have
Being a parent affects how much money you can make throughout the year and still qualify for the EIC. The number of children you have also makes a difference.Take a look at our table below to see how kids affect your maximum income limits.
How much you made throughout the year
Whether or not you qualify depends largely on how much money you make in the tax year you’re filing for.
If you’re not sure, use the EITC Assistant for help. The program can walk you through calculating the amount you made minus any adjustments.
How much will I get?
How much you’ll get back also depends on how you file and how many kids you have. Here are the maximum amounts you can expect:
- No kids: $538
- One kid: $3,584
- Two kids: $5,920
- Three+ kids: $6,660
Since these are maximums, you might get a smaller tax credit. The EITC Assistant can help you estimate how much you can expect back.
Applying for the EIC
You’ll claim the EIC on your federal tax form when you file it. The IRS has a complete list of all the documents you’ll need before you can finalize your tax forms. See a tax professional if you need help filing your returns or understanding if you qualify for the EIC.
Also, check out this handy breakdown of common mistakes people make when filing for the EIC.
One last thing to keep in mind
Each year the requirements for maximum income to receive the EIC change. You’ll want to check back with the IRS before filing each year.
If you can get it, the EIC is a great way to lower the amount you owe in taxes and get cash back in your wallet.
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