Posted by Karen Munoz, EA

Qualification for the Earned Income tax Credit (EITC)

Qualification for the Earned Income tax Credit (EITC)

Also known as EITC or EIC, the Earned Income tax Credit is a refundable credit, meaning that if you owe no tax and you qualify, you will get the value of the credit. The idea is to relieve low and middle-income working-class families. However, there are many criteria one needs to consider before claiming the EITC.

 

Requirements for EITC

Here are some requirements for EITC

  1. Your AGI and earned income are within some limits 

  2. You meet some rules like SSN, residency, filing status and income requirements.

  3. You meet one of the following rules:

  • Qualifying for the rules of people without a kid (are within the range of 25 to 65 years, and is not eligible to be claimed as a dependent on someone else’s return)

  • Possess a child that satisfies the fundamental rules or your partner, provided you file a joint return. 

The following section explores the basis to claim EITC, explored in different ways to make you understand it.

 

EITC Income Requirement 

Earn income is any money you get from your employer or any money that comes from your business. Such earned incomes are tips, wages, salaries, non-taxable combat, benefits of union strikes, and some benefit from some disability. 

You cannot classify the following as earned income: Social Security, retirement income, benefits from unemployment, child support and alimony. One needs nothing less than 1 dollar to claim the Earned Income tax Credit. 

One needs less than $3,600 for investment income, and one must not file a foreign earned income form. The following are limits for your earned and adjustment income:


Filing Status 

Qualifying Children Claimed




Zero

One

Two

Three 

or More

Single, Widowed or Hoh

$15,570

$41,094

$46,703

$50,162

MFJ (Married Filing Jointly)

$21.370

$46,884

$52,493

$55,952


Filing Status for EITC  

Married and filing separately are not qualified to claim EITC, while other filing status can be claimed.

 

Residency Requirement for EITC 

The qualifying kid and taxpayer must live under the same roof for over half of the year. This implies more than six months or 183+ days.  One needs to be located in one of the 50 states of the US or the District of Columbia. Such a person must not be a nonresident alien; the person claiming such must be a resident or citizen.

For instance, Barney stays at home from March to Jul, and he graduates from high school and switches to a private apartment. However, he still got financial assistance from his parents since he got no job. Since Barney only stayed with his parents for five months, he will not pass the residency test.

Theresa and George have their daughter in Hawaii in Feb. They moved to the UK in June for a job; as a result, they are not qualified for the EITC since they did not maintain a US residence for up to six months.

 

Citizenship Requirements for EITC

 The qualifying kid must be a US citizen, resident or national. Also, the person claiming such must be a citizen of the US or resident alien for the tax year. Also, every party involved – taxpayer, child, etc. must have valid Social Security Numbers.

 

Age Requirement for EITC

The qualifying kid in question must either be younger than the taxpayer or be total or permanently disabled. Also, such a kid must be below 19 or under 24 for a student who is permanently disabled. 

Tiffany, 16, can claim her son Rick, who is four years for EITC

Mark, 65, can claim his daughter, Mary, 20, who is enrolled in college for EITC


Eligibility Requirement for EITC

Such a kid must be the daughter, son, stepson, stepdaughter, adopted kid, stepsibling or descendant of their relatives. Anyone who only meets the "qualifying relative" test cannot qualify for the EITC. As a result:

A father can claim his daughter.

An older sister can claim their younger stepdaughter 

A grandmother can claim his granddaughter 

Toby lives with his girlfriend, who is a single mum. Since Toby is not the kid's father, he cannot claim the kid for EITC even if he passed other tests.  


FOR MORE INFORMATION ON HOW KAREN MUNOZ, EA CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.


THANKS FOR VISITING.

Karen Munoz, EA
Contact Member