The Earned Income Tax Credit (EITC) is a tax credit for low to moderate-income families who meet the specific income and dependent requirements. The EITC is a refundable tax credit that is applied to your tax bill. If the credit you claim is more than your total tax bill, you can keep the difference. The EITC is also called the EIC or Earned Income Credit.
What is earned income for the EITC?
Earned income is any form of payment that you receive from doing work. It will be most likely reported on a W-2 or 1099. There are various types of earned income, including:
- Jury duty pay
- Long-term disability
- Nontaxable combat pay
- Self-employment income
- Combat pay
To qualify for the EITC, you must have earned income, and it must be below a certain limit for your filing status. If your Adjusted Gross Income (AGI) is equal to or more than the amounts listed below, you cannot claim the EIC.
If your filing status is Single: Your AGI must be less than $15,820 if he or she has no children; $41,756 with one child; $46,703 with two children; and $50,162 with three or more children.
If your filing status is Married Filing Jointly: Your AGI must be less than $21,370 if you have no children; $46,884 with one child; $53,330 with two children; and $56,844 with three or more children.
**If your income in 2020 was less than your income in 2019, the IRS will allow you to use your 2019 earned income amount when you file your return for 2020 (this is the return you file in 2021). This exception is intended to help taxpayers whose income/employment was affected by the COVID-19 pandemic. Using your 2019 income will slow down the delivery of your refund.
Do I qualify for the Earned Income Tax Credit?
The EITC has several qualifications. Read each one carefully to see if you qualify.
- You must have earned income (see section above for details).
- You must have a valid Social Security Number. Your spouse and qualifying children must also have one if you are claiming them or filing married filing jointly.
- Your filing status cannot be married filing separately.
- You must be a U.S. citizen or resident for the whole year OR a nonresident married to a U.S. citizen or resident and be filing a joint return.
- You cannot be the qualifying child of another person.
- You must meet the earned income, AGI and investment income limits listed below.
- Your qualifying child cannot be used by more than one person to claim the EITC.
- You cannot file Form 2555/2555-EZ for Foreign Earned Income.
- Your investment income must be $3,650 or less.
If you do not have a Qualifying Child, you must:
- be at least 25 but younger than 65 at the end of the year.
- live in the United States for more than half the year.
- not be the Qualifying Child of another person.
Who is a qualifying child for the EITC?
A child must meet the following requirements to be used for the EITC.
A child must meet at least one of the following requirements.
- Under 19 and younger than you or your spouse
- Under 24 and a full-time student in the last 5 months, as well as being younger than you or your spouse
- Any age and permanently and totally disabled at any time during the year
A child must meet at least one of the following relationship requirements.
- Son, daughter, adopted child, stepchild, eligible foster child, or a descendant of any of them
- Brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of them
- A legally adopted child
- A foster child who was placed with you by an authorized placement agency or order of the court
A child must have lived in the U.S. with you or your spouse for more than half the year.
How much is the EITC for 2020?
The maximum amounts for tax year 2020 (returns filed in 2021) are as follows:
- $538 with no Qualifying Children
- $3,584 with one Qualifying Child
- $5,920 with two Qualifying Children
- $6,660 with three or more Qualifying Children
Do I have to have children to claim the EITC?
No, the EIC is not only for parents. The credit amount is worth more for eligible taxpayers with children, but an eligible person with no dependents can also claim the Earned Income Tax Credit.
How do I claim the EITC?
To get the EITC, you must file a tax return, even if you are not required to file taxes, and claim this credit on your return. File with TaxSlayer and we’ll suggest all the right tax breaks for you based on your answers to a few simple questions.
This article is up to date and accounts for tax law changes for tax year 2020 (tax returns filed in 2021).