Get a Larger Tax Refund With the Earned Income Tax Credit (EITC)

By Top Tax Staff | Dec 17, 2013 7:00:00 AM | Tax Credits and Deductions

    

earned-income-tax-credit

The Earned Income Tax Credit (EITC) is one of the most commonly claimed income tax credits in the IRS code. This credit, which is designed to provide financial assistance to low-income taxpayers and their families, is one of the few refundable tax credits allowed by the Internal Revenue Service. Unlike other tax credits that simply reduce the amount of tax liability, the EITC directly increases a taxpayer's refund. However, in order to claim the credit, taxpayers must meet very strict requirements regarding their qualifying relatives, earned income amounts, and filing statuses.

ARE YOU FACING UNPAID TAXES? UNDERSTAND THE COLLECTION NOTICES YOU MAY RECEIVE »

Qualifying for the Earned Income Tax Credit

There are a few major EITC requirements that taxpayers must meet. These include the following:

  • You must have earned income from a job during the year.
  • You must have a qualifying child if your income is over a certain amount.
  • If you do not have a qualifying child, you must be between the ages of 25 and 65.
  • If you are married, you must file a joint tax return.
  • You must be a citizen of the United States or a taxpaying resident alien.
  • You must have a valid Social Security number.
  • You must not be able to be claimed as a dependent by someone else.

For EITC purposes, a qualifying child must be younger than age 19 by the end of the tax year or younger than age 24 if he or she is a full-time student. He or she must also live with you and derive financial support from you for at least half the year and be legally related to you.

Earned Income Tax Credit Limits for 2013

Every year, the IRS adjusts the maximum income and credit limits for the EITC to keep pace with inflation. The 2013 income limits are as follows:

  • Married filing jointly: $50,270 (three or more children), $47,162 (two children), $42,130 (one child), $19,190 (no children)
  • Head of household or single: $45,060 (three or more children), $41,952 (two children), $36,920 (one child), $13,980 (no children)

The 2013 maximum Earned Income Tax Credits are as follows:

  • Three or more children: $5,891
  • Two children: $5,236
  • One child: $3,169
  • No children: $475

DO YOU NEED IRS TAX HELP? SCHEDULE A FREE CONSULTATION WITH OUR TAX EXPERTS »

Claiming the Earned Income Tax Credit

To claim the tax credit, you'll need to complete Schedule EIC "Earned Income Credit" and list each of your qualifying children, along with their birthdates, relationships to you, and Social Security numbers. You can use the EITC tables in the back of Publication 596 to figure your exact credit. Once you find the appropriate total, add it on Page 2 of Form 1040 on the line that says "Earned Income Tax Credit."

The EITC can be a very useful credit for low-income taxpayers. If you think you might qualify for the Earned Income Tax Credit this year, a tax preparation specialist can make sure you meet the required standards.

 

Tax Credits Guide