OLT TAX CORNER ~ Earned Income Credit

The earned income credit (EIC) is a benefit for working people who have low to moderate income. A tax credit means more money in your pocket. It reduces the amount of tax you owe and may also give you a refund. You could qualify for EIC if your income is under the requirement for your filing status.

To claim EIC on your tax return, you must meet all the following rules:

• You, your spouse (if you file a joint return), and all others listed on Schedule EIC, must have a Social Security number that is valid for employment and is issued before the due date of the return including extensions
• You must have earned income from working for someone else or owning or running a farm or business
• Your filing status cannot be married filing separately
• You must be a U.S. citizen or resident alien all year (If you are a nonresident alien married to a U.S. citizen or resident alien, see Publication 519, U.S. Tax Guide for Aliens)
• You cannot be a qualifying child of another person
• You cannot file Form 2555 (related to foreign earned income)
• You must meet the earned income, AGI and investment income limits (income limits change each year), see EITC Income Limits for the tax year amounts
• And you must meet one of the following:
  • Have a qualifying child
  • If you do not have a qualifying child, you must:
    • live in the United States for more than half the year, and
    • not qualify as a dependent of another person.
    • EIC rules for taxpayers without a qualifying child. Special rules apply if you are claiming the EIC without a qualifying child. In these cases, the minimum age has been lowered to age 19 except for specified students who must be at least age 24 at the end of the year. However, the applicable minimum age is lowered further for former foster youth and qualified homeless youth to age 18. Additionally, you no longer need to be under age 65 to claim the EIC without a qualifying child.
• Rules for separated spouses. If you are married but don't file a joint return, you may qualify to claim the EIC if you live with a qualifying child for more than half the year and either live apart from your spouse for the last 6 months of 2025 or are legally separated according to your state law under a written separation agreement or a decree of separate maintenance and do not live in the same household as your spouse at the end 2025

For more information on EIC see IRS Publication 596

A qualifying child for the Earned Income Credit does not need to qualify as a dependent unless he or she is married.

The noncustodial parent cannot claim the Earned Income Credit on the basis of that child because the child did not live with that parent and does not meet the residency test. The custodial parent may be able to claim the Earned Income Credit.

If the child is a qualifying child of both parents, they may choose which one will claim the credit. If there are two qualifying children, each parent may claim the credit on the basis of one of the children or one parent may claim the credit with both children. If both actually claim the credit on the basis of the same child or children, the parent who is entitled to the credit is the parent with whom the child lived for the longest period of time during the tax year, or the parent with the higher Adjusted Gross Income (AGI) if the child lived with each parent for the same amount of time during the year.

Yes. If your earned income credit (EIC) for any year after 1998 was denied (disallowed) or reduced by the IRS, you may need to complete an additional form to claim the credit. Form 8862, Information To Claim Earned Income Credit After Disallowance is the form you will need to complete in order to claim EIC. For more information you can read about the Disallowance of EIC on the IRS website at:

Publication 596

A social security number can only be claimed for EIC once. In other words, two people cannot claim the same child for EIC. You will need to talk with the other person to decide who will claim the child for EIC. If you cannot decide, then there are guidelines laid out by the IRS. Only one of you will be able to claim the credit using that child, as follows:

• The parents, if they file a joint return,
• The parent, if only one of the persons is the child's parent,
• The parent with whom the child lived the longest during the year, if the two persons are parents of the child,
• The parent with the highest AGI if the child lived with each parent for the same amount of time during the tax year, or
• The person with the highest AGI, if none of the persons are the child's parent.

No, the earned income tax credit is only for individuals with earned income. Unemployment compensation is not considered earned income but will be used if additional income is earned and it makes the EIC a less amount.

You may still be able to if your adjusted gross income is under the EIC requirement for single filer without dependent.