The Earned Income Tax Credit (EITC) is a tax credit for low- to moderate-income working individuals and families that is designed to provide an incentive to work and offset the burden of Social Security taxes. Here is everything you need to know about the EITC:
- Who is eligible for the EITC?
To qualify for the EITC, you must meet certain requirements, including:
- Having earned income from employment, self-employment, or other sources
- Filing a tax return, even if you do not owe any tax,
- Having a valid Social Security number
- Being a U.S. citizen or resident alien for the entire tax year
- Not filing your taxes as married filing separately
- Not being claimed as a dependent on someone else’s tax return.
- Meeting other eligibility criteria, depending on whether you have qualifying children
- What are the income limits for the EITC?
The income limits for the EITC change every year and depend on your filing status and the number of qualifying children you have. For the tax year 2021, the income limits are:
- $15,980 ($21,920 married, filing jointly) with no qualifying children
- $42,158 ($48,108 married filing jointly) with one qualifying child
- $47,915 ($53,865 married filing jointly) with two qualifying children
- $51,464 ($57,414 married filing jointly) with three or more qualifying children
- How much is the EITC?
The amount of the EITC you receive depends on your income, filing status, and the number of qualifying children you have. For tax year 2021, the maximum credit amounts are:
- $1,502 with no qualifying children
- $3,618 with one qualifying child
- $5,980 with two qualifying children
- $6,728 with three or more qualifying children
- What are the requirements for qualifying children?
To claim the EITC with qualifying children, the child must meet certain requirements, including:
- Being your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or descendant of any of them (such as a grandchild, niece, or nephew)
- Being under age 19 at the end of the tax year, or under age 24 and a full-time student at the end of the tax year, or any age and totally and permanently disabled
- Having lived with you in the United States for more than half of the tax year
- Meeting other eligibility criteria, depending on your specific situation
- How do I claim the EITC?
To claim the EITC, you must file a tax return and complete the appropriate forms and schedules. You can use tax preparation software, hire a tax professional, or file a paper return to claim the credit. The IRS also provides a free online tool called the EITC Assistant that can help you determine your eligibility and estimate the amount of the credit you may be able to claim.
- Is the EITC refundable?
Yes, the EITC is a refundable tax credit, which means that if the amount of the credit exceeds the amount of taxes you owe, you can receive a refund for the difference.
- When will I receive my EITC refund?
The IRS usually issues EITC refunds within three weeks of the date you file your tax return, as long as there are no errors or issues with your return. However, if you file your return electronically and choose to have your refund deposited directly into your bank account, you may receive your refund even faster.