Online Tax Tools and Information Can Help You Find Out if You Qualify for an Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a program designed to provide tax relief for American workers with low-paying jobs. Could you qualify for this tax credit? If you have a relatively low income, take some time to find out.

Earned Income Tax Credit Qualification

Some eligible taxpayers miss out on EITC savings because they have no taxes withheld and think that they cannot possibly qualify. However, EITC is a refundable tax credit, meaning that even if you owe no taxes you may be eligible to get money back — as long as you file a tax return. You cannot qualify if you do not file. But if you do file, and owe no taxes, you may get a check from Uncle Sam anyway!

To claim this credit, you must meet certain requirements. First, you must have earned income. Generally, this refers to wages, salaries, tips or self-employment income. Other earned income sources include long-term disability benefits (if you are below the minimum retirement age) and union strike benefits. Unemployment benefits such as alimony, child support, interest/dividends, and Social Security benefits do not count as earned income. Non-taxable combat pay may be classified either way — seek professional advice in that situation. You must also have a valid Social Security number and be a U.S. citizen or resident alien, and you cannot be claimed as a qualifying child of another taxpayer.

Next, your Adjusted Gross Income (AGI) must be below a series of scaled limits based on filing status and the number of qualifying children that you have. A qualifying child must be a close relative (child, grandchild, stepchild, or adopted child) and younger than nineteen years of age (or 24 if a full-time student). Foster children also qualify. Details are available here. Note that only one person can claim the same child. This may cause trouble among separated or divorced parents and can put the IRS in the position to determine who can rightfully claim the credit.

AGIs are found on line 7 of Form 1040. In tax year 2018 (to be filed by April 15, 2019) for single filers, heads of household, or widowers, the AGI limit is $15,270 with no qualifying children, $40,320 for one child, $45,802 for two, and $49,194 with three or more. For married filing jointly status, the corresponding limits are $20,950, $46,010, $51,492, and $54,884, respectively. The corresponding maximum tax credits range from $519 with no qualifying children to $6,431 with three or more qualifying children.

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Source: CBN