What is the EITC?

The Earned Income Tax Credit (EITC) is a refundable tax credit for low and moderate-income workers. The amount you receive depends on income and number of children you have. People without kids can qualify and for 2020 the EITC ranges from $538 to $6660. If you fall within the guidelines for the credit, be sure to claim it on your return when you do your taxes. If you did not claim the EITC when you filed your taxes in the last three years but you think you qualified for it, the IRS encourages you to let it know so you can get the credit back. Your EITC return does not just make your taxes less expensive but it also can be a refund which can be greater than what you paid in taxes. 

Do I qualify? 

There are some qualifications that you have to meet in order to be eligible for EITC: 

• You must have at least $1 of earned income (pensions and unemployment do not apply)
• Your 2020 investment income must be $3,650 or less
• You can not claim the earned income tax credit if you are married filing separately
• You must not file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion 

If you have not violated any of these requirements you may qualify for EITC. This can help you gain extra income or make your taxes significantly cheaper which will allow you to spend your money elsewhere. 

How much do I qualify for?

There are certain requirements and income brackets you have to fall under to receive EITC. Also, the thresholds change from year to year so it is important to check the IRS website for the most up to date brackets for the EITC.

If you claim children as part of your EITC, each child must fall under certain categories to qualify: 

• The child you claim can be your son, daughter, adopted child, step-child, foster child, or grandchild. The child can also be your brother, sister, half-brother, or half-sister, step-brother, or step-sister 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 are filing jointly, or the child must be under 24 if he or she was a full-time student. There is no age limit for kids who are permanently or totally disabled.
• The child must have lived with you or your spouse in the United States for more than half the year. 

If you do not have kids you must have resided in the United States for more than half a year, No one can claim you as a dependent or qualifying child on his or her tax return, and you must be at least 25 but under 65 at the end of the year. 

How do I Claim my EITC?

You need to gather the documents outlined on the IRS website. If you have qualifying children you must file the Schedule EIC listing the children with Form 1040, US Individual Income aTax Return or Form 1040 SR. You can file your own taxes and claim the EITC or go with a tax filing service such as TurboTax. If you can not provide all the forms listed on the IRS website it is worth calling or finding out if you can still file and claim your EITC. 

Takeaways

The Earned Income Tax Credit can help you get a refund or tax deductions if you qualify. Usually, people with children are more likely to qualify but you do not have to have children to access the EITC. Make sure you can provide all the forms the IRS wants so that you can be accurately assessed for the EITC.