What is the Earned Income Taxation Credit (EITC)?

The Earned Income Tax Credit (EITC) may lower the taxes y'all owe and refund you up to $6,728 at taxation time.

The Earned Income Revenue enhancement Credit (EITC) is a taxation credit that may requite you money back at tax time or lower the federal taxes you owe. You can merits the credit whether you're single or married, or have children or not. The main requirement is that yous must earn money from a job.

The credit can eliminate any federal tax you lot owe at revenue enhancement time. If the EITC amount is more than what you lot owe in taxes, you get the money dorsum in your revenue enhancement refund. If you qualify for the credit, yous can nevertheless receive a refund even if y'all practice non owe income tax.

Beyond the federal EITC, 29 states and D.C. have adopted state EITCs. Check out the land EITC map to see if your country offers a tax credit.

How much can I get with the EITC?

The credit amount depends on your income, marital status, and family unit size. In 2021, the credit is worth up to $half dozen,728. The credit amount rises with earned income until it reaches a maximum amount, and so gradually phases out. Families with more children are eligible for higher credit amounts.

The Earned Income Tax Credit in Tax Year 2021

Number of children: Single workers with income less than: Married workers with income less than: EITC up to:
3 or more children $51,464 $57,414 $6,728
ii children $47,915 $53,865 $5,980
1 child $42,158 $48,108 $3,618
No children $21,430 $27,380 $1,502

Y'all cannot become the EITC if y'all take investment income of more than $10,000 in 2021. Investment income includes taxable involvement, taxation-exempt interest, and capital gain distributions.

Am I eligible for the EITC?

There are iii main criteria to claim the EITC:

  • Income: You need to piece of work and earn income. Your work doesn't have to be year-round. Your earnings cannot exist more than than the amounts in the nautical chart to a higher place, including investment income. Earned income tin be from wages, bacon, tips, employer-based disability, self-employment income, military machine pay, or union strike benefits.
  • Taxpayer Identification Number: Yous demand to accept Social Security numbers that permit piece of work for yous, your spouse, and whatsoever children claimed for the EITC. Yous do not need to be a citizen to claim the EITC if you have a Social Security Number. You cannot claim the federal EITC if you file your taxes with an ITIN. For more information, please see Taxation Filing with Immigrant or DACA Status .New: if you live in California, Colorado, Maine, Maryland, or New Mexico, you may be eligible to get the state EITC with an ITIN.
  • Qualifying Kid: If yous merits children for the EITC, they must exist a "qualifying kid". Run across below for details.

Additional criteria for some people to claim the EITC:

  • You lotmust be 19 years of age and above if y'all are not claiming children
  • Youscannot file as married filing separately

Exceptions utilise for both. Run into What's New nigh the EITC?  for details.

Does my child qualify for the EITC?

If you merits children as office of your EITC, they must pass three tests to be a "qualifying kid":

  1. Relationship: The kid must be your son, daughter, grandchild, stepchild or adopted child; younger sibling, step-sibling, one-half-sibling, or their descendent; or a foster kid placed with you past a regime bureau.
  2. Age: The kid must exist under 19, under 24 if a full-time student, or any age if totally and permanently disabled.
  3. Residency: The kid must alive with you in the U.S. for more than half the twelvemonth. Time living together doesn't have to be consecutive.

How do I claim the EITC?

To claim the EITC, you must file a tax render. If yous are claiming a child for the EITC, you also need to submit "Schedule EIC".

Going to a paid tax preparer is expensive and reduces the corporeality of your tax refund. Luckily, there are free options bachelor. You can visit a Volunteer Income Taxation Assistance (VITA) site or GetYourRefund.org to have IRS-certified volunteers accurately file your taxes for costless. Y'all can also visit MyFreeTaxes.com to file your ain taxes for free online if you do not have cocky-employment income.

Does my state have an EITC?

Many states take their ain version of the federal EITC that can add more money to your tax refund. Most states match a percentage of your federal credit amount. Find out if your land has a land-level tax credit.

What's New Well-nigh the EITC?

Under the 2021 American Rescue Plan, there are multiple temporary and permanent changes to the EITC.

Temporary Expansions to the EITC for Tax Year 2021 But

There are 2 central temporary EITC expansions.

  1. If You Take No Qualifying Children

Y'all may qualify for the EITC if you are 19 years old or older and not a pupil. There are two exceptions:

      • Workers who are 19-23 and were a full- or office-time educatee for more than five months in 2021 do non qualify.
      • Qualified homeless youth or former foster youth who are at least 18 years onetime and work are eligible fifty-fifty if they are a student.
  1. If Your 2021 Income is Lower Than Your 2019 Income

If your income in 2021 is less than your 2019 income, you can use your 2019 earned income to summate your EITC. Choose the year that gives you the bigger refund. If you lot are married filing jointly, the total earned 2019 income refers to the sum of each spouse's earned income in 2019.

Permanent Changes to the EITC

There are 4 major permanent changes to the EITC.

  1. If Your Qualifying Kid Doesn't Take a Social Security Number

Y'all can claim the EITC for workers without children if you lot have a qualifying child for the EITC who doesn't have a Social Security number.

  1. If Yous're Married Filing Separately

If you are married filing separately, you may yet authorize for the EITC if your qualifying kid lives with you lot for more than six months of the yr and you lot fulfill at to the lowest degree i of the post-obit requirements:

      • You and the qualifying child do not alive with your spouse during the last six months of the taxable year
      • Y'all and your spouse have a decree, instrument, or agreement (too a divorce decree) and do not alive together

Note: Filing taxes equally married filing separately may affect your eligibility for other taxation benefits. Please consult a tax professional if you need assist determining your filing status.

  1. If You lot Take Investment Income

The maximum investment income allowed to merits the EITC is permanently increased to $ten,000 from $three,650.

  1. If You lot Alive in a U.S. Commonwealth or Territory

Starting in 2021, individuals living in the following U.S. Commonwealths and territories are allowed to merits the EITC:

      • Puerto Rico
      • U.S. Virgin Islands
      • Guam
      • The Democracy of the Northern Mariana Islands
      • American Samoa

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