When doing income taxes, it's important to know what credits you're entitled to. Taking advantage of them can lower your income taxes a great deal, and make life easier for you.
Knowing who qualifies for EIC is not always a cut and dry case. Assessing your situation with our EIC calculator can tell you if you'll qualify for this credit and how much you might get.
Learn more about why you should take this credit if it's available to you and who gets it on their IRS tax return, below.
The earned income tax credit came out in the 1970s. The thought behind creating the EIC was to put money back in the pockets of families who were lower income, rather than tax them more.
This allows them to keep working and spending additional money that boosts the economy. The tax credit was expanded upon in the 1980s by President Regan.
Knowing the earned income credit qualifications is tricky since it varies by family size and income level combined. Be sure to check back regularly to test your situation with our EIC calculator.
As you learn more about the credit, think about how your family might change in the years to come, to get an idea if you'll continue to qualify for it.
The earned income credit qualifications vary greatly among people depending on how large or small their family size is.
Both people with and without children are among those who qualify for the EIC. People can file as one of the following when claiming these IRS tax credits:
Those who don't have children must meet the following conditions:
Income plays a part in deciding if you'll get an EIC refund or not. The amount can change each year, making it difficult to know if you'll be above or under the threshold.
Just because you don't qualify for the EIC one year doesn't mean you shouldn't check every tax year. As rules change and your family size increases or your income decreases, you could become eligible for this particular credit or even others.
If you do your own taxes, go through everything carefully. Otherwise, a qualified tax professional can assist you in finding credits you'll qualify for.
Although you don't need children to meet EIC qualifications, you'll qualify at a higher level of income with them.
Your credits vary based on how many children you have and range from the following:
These numbers are updated regularly and subject to change.
The child you're claiming must pass a relationship test to you as well. Children who qualify for the EIC must be related to you in one of the following ways:
The children must be younger than the person filing. They need to be no older than 19, or no older than 24 if they're enrolled in college fulltime.
If the child is permanently disabled, they can get claimed by their parent no matter how old they are.
Keep in mind that only one person can claim the child per tax year. If you get divorced, both you and your ex-spouse cannot both claim the child on your respective tax returns.
If you're not sure if your child still qualifies for you to take the earned income credit, run some numbers through our EIC calculator. You'll get an idea of what your taxes could look like, and how much money you should expect to get.
It's possible to get more than one credit when you claim the earned income credit on your taxes. Each credit depends on your situation.
Individuals who have children can also take the child and dependent care credit. If a child was adopted, there is a special credit that parents can take specifically for that occasion.
Additional credits come in the form of help for people who've attended college, own a home, or stayed insured through healthcare. There's also deductions related to work including moving for work, and ways that individuals can itemize their business and save money.
You can learn more about the various deductions and credits and how they'll affect your tax return. If you believe you qualify for other deductions, speak with a tax representative and find out if you can take these credits along with the earned income credit.
In many cases, individuals can make use of multiple credits, which allows them to walk away with greater savings on their taxes. Go through every deduction carefully, since you might be eligible for certain ones you didn't think were possible.
Hopefully, after using our EIC calculator you'll walk away knowing more about taxes and what you could qualify for in the years to come.