Tax Deductions and Credits What is the Earned Income Tax Credit? Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by Published Jan 30, 2012 - [Updated Sep 7, 2017] 3 min read The earned income tax credit (EITC) provides additional funds to people who, despite working, receive low to moderate incomes. Easy enough, right? Unfortunately, there are countless rules and exceptions to those rules in determining eligibility for the EITC. Let’s get right to simplifying it for you. Earned Income Tax Credit Earned Income Tax Credit Eligibility To qualify for the EITC, you must have a Social Security Number, work for pay, and earn less than a certain dollar threshold (amounts detailed later). There are many other requirements including USA citizenship/resident alien status and limitations on investment and foreign income, but those are typically not issues for people otherwise qualified for the EITC. Work for Pay Unemployment income doesn’t help you qualify for the EITC. Neither does bank interest. In order to receive any money via the EITC, you must work. You can have a traditional job as an employee or you can be your own boss and earn money from self-employment. But one way or another, you’ve got to earn some money in order to qualify for the EITC. Income Limits For the 2011 tax year (the tax return you’re about to file), your earned income (what you receive due to your work), and your adjusted gross income (AGI, the sum total of all of your earnings less certain deductions) must be less than: $43,998 ($49,078 married filing jointly) with three or more qualifying children $40,964 ($46,044 married filing jointly) with two qualifying children $36,052 ($41,132 married filing jointly) with one qualifying child $13,660 ($18,740 married filing jointly) with no qualifying children Qualifying Children As you can see above, the relevant income limits are much more generous if you take care of at least one qualifying child. Your child qualifies if he or she meets all of the following conditions: Has a valid Social Security Number Is your child (natural, adopted or foster), grandchild, sibling, step-sibling, half-sibling, niece, or nephew Younger than you and younger than 19, unless a student (in which case your child must be less than 24), or totally and permanently disabled (in which case there is no age limit) Lives with you in the United States for more than half of the year The child doesn’t file a joint tax return. For more information or to help determine your eligibility for the Earned Income Tax Credit, use EITC Finder app by Intuit. Claiming the EITC The EITC Finder app and TurboTax can help you claim the Earned Income Tax Credit. Note that unlike many other tax credits, the EITC is a refundable tax credit. This means that the EIC can not only eliminate any income tax liability you might otherwise face but, to the extent your tax credit exceeds your liability, you can pocket the difference. It is for this reason that the EITC is one of the most important tax considerations. Make sure to review the table above and use the EITC Finder app– if your income is below the relevant threshold, . It just might mean an extra $2,000 or more in your pocket. Few other tax maneuvers can earn you that kind of cash! Previous Post The State Sales Tax Deduction Next Post Historical Comparisons of Standard Deductions and Personal Exemptions Written by More from 25 responses to “What is the Earned Income Tax Credit?” Hello, my husband works as a independent contractor and made about 12,000 in 2014, I was wondering if we qualify for earned income and we have 2 children under age 4… Will we most likely have to pay back or possibly get a refund??? This is so stressful, I’m clueless about taxes and worried about having to end up paying… Please help me. Reply My wife and children arrived on July 7 from Thailand to live with me in the US. All have ssns, but we missed the 6 month cut off for the EIC by about a week. However, my wife received her visa on June 20. Can I count the time from June 20 to July 7 as them taking a vacation, so that I can claim the EIC? Reply I am an independent contractor. Do I use my gross income or business income profit as my “earned income?” EIC form is unclear – says to use Line 7 of 1040, which is not for business income. Reply Hi! You use your net profit (gross income after expenses) when figuring our the Earned Income credit. Hope this answers your question. Lee Reply i am self employed my earnings are around 22,000.. my ex pays alimony in the form of my van payment.. he paid it off and is claiming it on his taxes which is about 25,000..if that is not considered earned income would i still be able to get the earned income credit..i have one child to claim Reply hi my husband worked for 7 months was payed 250 .00 a week we have 5 children 3 disabled all in school now he is working at a place that takes taxes out how do we pay what he would owe in for state and fed. ss all that what kinda form do i need the family he worked for wont give him a 1099 but i got reseats for each week he got payed be 4 the job he has now Reply I have three children but I didint make over 7 thousand for the year , single mom three kids should I even file ? Reply Yes, you should file because you may qualify for the earned income credit and/or the child tax credits. You may even qualify for a refund of the taxes you paid in on your W-2. Reply Hello, I am a independent contractor, claiming Head of Household with two children(ages 6 and 9).My income per 1099 was approximately 23,000. Is TurboTax.com software correct in stating that I do not qualify for EIC? Reply I made 1600.00 as a handyman this year and no taxes were taken out. I also have a 6 year old child who lives with me. Should I even file? Reply Hi Kelly, Yes you should. You may still be entitled to a tax refund if you qualify for credits like the Earned Income Tax Credit or the Child Tax Credit. You would most likely be entitled to file your federal taxes for free at http://turbotax.intuit.com/ or you may qualify to file both your federal and state tax return for free at http://turbotax.intuit.com/taxfreedom/ Thank you, Lisa Greene-Lewis Reply My husband pays me spousal support & child support. We live in separate homes but have not filed for divorce. Do I have to claim that on taxes if I do not work otherwise?? Reply I am filing singly for 2011. My income was 27,000 for the year. A little over 26,000 for S.S.D.I the rest from a part-time job. Do I qualify for EIC? and if not what form would I use? THX Stan Reply Is there a minimum age to qualify for EITC? Reply Thank you so much for this very informative blog!! It was right to the point and made me feel better for accepting a position as an independant contractor! I have used turbotax for the past 4 years and will continue to do so. Thanks! Reply I am self employed so have schedules C and SE. Turbotax is combining my net and gross income to get my ‘earned’ income. Why? Something must me entered wrong somewhere but I can’t figure it out. Also, there is an ‘error’ on the 1040 section of Alimony, asking for the recipients social security #. I told turbo tax software that we had no alimony (coming in or going out), I even went back to that section “updated” it to say we didn’t, but it is still flagging it as an error. How do I fix this? Wendi Reply Hi Wendi, Sorry you are having difficulty. In TurboTax online: 1. Go to the Home Tab 2. Scroll down to “Delete a Form” 3. Click “Delete a Form” 4. All forms associated with your tax return will come up 5. Delete the schedule C and SE and re-enter the information Regarding the alimony section, did you ever have alimony? It may be transferring from your previous tax return. 1. Click the “wages and income” section 2. Click “explore on my own” 3. On the “My 2011 Income Summary” screen scroll down/click “Alimony” under “Less Common Income” 4. On the “Alimony or Spousal Support Received” screen make sure nothing appears. If you are still having difficulty please contact our free tax experts so they can speak with you live. Thank you, Lisa Greene-Lewis Reply Can I file for EITC if I am single with no children? Reply Hi Ryan, If you meet the income qualifications you can. Thank you, Lisa Greene-Lewis Reply will i have to owe anything or have to make payments to return any of the money? also how soon will it start showing up on my paycheck? Reply Do I have to file a tax return as well as applying for EITC? What form do I use for WITC? Reply Hi Jack, Yes in order to claim the EITC you have to file a tax return. Thank you, Lisa Greene-Lewis Reply Forgot to add. You don’t need to worry about the form. TurboTax will guide you through an interview and fill out the tax form for you. Thank you, Lisa Greene-Lewis i was a independent contractor for the year -2011 can i get a great a erned income credit. also what is the per mileage this year. Reply Hi Robert, As an independent contractor you can still get earned income credit as long as your income meets the appropriate income limits. The mileage rates are as follows: January 1 – June 30, 2011 Business 51 Charitable 14 Medical and moving 19 July 1 – December 31, 2011 Business 55.5 Charitable 14 Medical and moving 23.5 Thank you for using TurboTax Reply Leave a ReplyCancel reply Browse Related Articles Self-Employed Meet Moira Tax Planning TurboTax Enables Refund Advance to Taxpayers Investments Tax Benefits of Real Estate Investing Self-Employed Business Tax Checklist: What You’ll Need When Filing Uncategorized What Is Deferred Compensation & How Is It Taxed? Investments How Does an Inherited IRA Work? Work Choosing Your Business Structure: 5 Types of Businesses… Tax Deductions and Credits Are HOA Fees Tax Deductible? What You Need to Know Crypto Understanding Crypto and Capital Gains Work 7 Things You Need to Know About the New Business Report…
Hello, my husband works as a independent contractor and made about 12,000 in 2014, I was wondering if we qualify for earned income and we have 2 children under age 4… Will we most likely have to pay back or possibly get a refund??? This is so stressful, I’m clueless about taxes and worried about having to end up paying… Please help me. Reply
My wife and children arrived on July 7 from Thailand to live with me in the US. All have ssns, but we missed the 6 month cut off for the EIC by about a week. However, my wife received her visa on June 20. Can I count the time from June 20 to July 7 as them taking a vacation, so that I can claim the EIC? Reply
I am an independent contractor. Do I use my gross income or business income profit as my “earned income?” EIC form is unclear – says to use Line 7 of 1040, which is not for business income. Reply
Hi! You use your net profit (gross income after expenses) when figuring our the Earned Income credit. Hope this answers your question. Lee Reply
i am self employed my earnings are around 22,000.. my ex pays alimony in the form of my van payment.. he paid it off and is claiming it on his taxes which is about 25,000..if that is not considered earned income would i still be able to get the earned income credit..i have one child to claim Reply
hi my husband worked for 7 months was payed 250 .00 a week we have 5 children 3 disabled all in school now he is working at a place that takes taxes out how do we pay what he would owe in for state and fed. ss all that what kinda form do i need the family he worked for wont give him a 1099 but i got reseats for each week he got payed be 4 the job he has now Reply
I have three children but I didint make over 7 thousand for the year , single mom three kids should I even file ? Reply
Yes, you should file because you may qualify for the earned income credit and/or the child tax credits. You may even qualify for a refund of the taxes you paid in on your W-2. Reply
Hello, I am a independent contractor, claiming Head of Household with two children(ages 6 and 9).My income per 1099 was approximately 23,000. Is TurboTax.com software correct in stating that I do not qualify for EIC? Reply
I made 1600.00 as a handyman this year and no taxes were taken out. I also have a 6 year old child who lives with me. Should I even file? Reply
Hi Kelly, Yes you should. You may still be entitled to a tax refund if you qualify for credits like the Earned Income Tax Credit or the Child Tax Credit. You would most likely be entitled to file your federal taxes for free at http://turbotax.intuit.com/ or you may qualify to file both your federal and state tax return for free at http://turbotax.intuit.com/taxfreedom/ Thank you, Lisa Greene-Lewis Reply
My husband pays me spousal support & child support. We live in separate homes but have not filed for divorce. Do I have to claim that on taxes if I do not work otherwise?? Reply
I am filing singly for 2011. My income was 27,000 for the year. A little over 26,000 for S.S.D.I the rest from a part-time job. Do I qualify for EIC? and if not what form would I use? THX Stan Reply
Thank you so much for this very informative blog!! It was right to the point and made me feel better for accepting a position as an independant contractor! I have used turbotax for the past 4 years and will continue to do so. Thanks! Reply
I am self employed so have schedules C and SE. Turbotax is combining my net and gross income to get my ‘earned’ income. Why? Something must me entered wrong somewhere but I can’t figure it out. Also, there is an ‘error’ on the 1040 section of Alimony, asking for the recipients social security #. I told turbo tax software that we had no alimony (coming in or going out), I even went back to that section “updated” it to say we didn’t, but it is still flagging it as an error. How do I fix this? Wendi Reply
Hi Wendi, Sorry you are having difficulty. In TurboTax online: 1. Go to the Home Tab 2. Scroll down to “Delete a Form” 3. Click “Delete a Form” 4. All forms associated with your tax return will come up 5. Delete the schedule C and SE and re-enter the information Regarding the alimony section, did you ever have alimony? It may be transferring from your previous tax return. 1. Click the “wages and income” section 2. Click “explore on my own” 3. On the “My 2011 Income Summary” screen scroll down/click “Alimony” under “Less Common Income” 4. On the “Alimony or Spousal Support Received” screen make sure nothing appears. If you are still having difficulty please contact our free tax experts so they can speak with you live. Thank you, Lisa Greene-Lewis Reply
will i have to owe anything or have to make payments to return any of the money? also how soon will it start showing up on my paycheck? Reply
Hi Jack, Yes in order to claim the EITC you have to file a tax return. Thank you, Lisa Greene-Lewis Reply
Forgot to add. You don’t need to worry about the form. TurboTax will guide you through an interview and fill out the tax form for you. Thank you, Lisa Greene-Lewis
i was a independent contractor for the year -2011 can i get a great a erned income credit. also what is the per mileage this year. Reply
Hi Robert, As an independent contractor you can still get earned income credit as long as your income meets the appropriate income limits. The mileage rates are as follows: January 1 – June 30, 2011 Business 51 Charitable 14 Medical and moving 19 July 1 – December 31, 2011 Business 55.5 Charitable 14 Medical and moving 23.5 Thank you for using TurboTax Reply