The IRS Earned Income Tax Credit (EITC) is a tax credit for certain people who work and have earned income under $35,263. A tax credit usually means more money in your pocket. It reduces the amount of tax you owe. The Earned Income Tax Credit may also give you a refund, even if you do not owe any tax.
There are certain qualifications set by the IRS in order for
you to receive the Earned Income Credit. Please review the IRS EITC page and IRS Publication 596 for the full details.
You may be able to elect to use your 2004 earned income to figure your EIC if (a) your 2004 earned income is more than your 2005 earned income, and (b) your main home was in the Hurricane Katrina disaster area on August 25, 2005. Also, special rules may apply for people who had to relocate because of Hurricane Katrina. For details, see Pub. 4492
Earned Income Tax Credit Requirements
To claim the EITC, taxpayers must meet the following rules:
- Must have earned income
- Must have a valid Social Security number
- Investment income is limited to $2,700
- Filing status can’t be “married filing separately”
- Generally must be a U.S. citizen or resident alien all year
- Cannot be a qualifying child of another person
- Cannot file Form 2555 or 2555-EZ (related to foreign earned income)
For more help on determining if you qualify for EIC, you can use the IRS EIC Assistant
Earned Income Credit - Qualifying Child Criteria
A qualifying child cannot be used by more than one person to claim the Earned Income Tax Credit.
The child must meet the relationship, age and residency tests.
If you don’t have a child:
- You must be at least age 25, but under age 65
- You cannot qualify as the dependent of another person
- You must have lived in the United States more than half the tax year
Earned Income Credit - Proper Income Reporting
You need to have worked and have earned income less than:
- $11,750 ($13,750 if married filing jointly) if there is no qualifying child
- $31,030 ($33,030 if married filing jointly) if there is one qualifying child
- $35,263 ($37,263 if married filing jointly) if there is more than one qualifying child
Common Earned Income Credit errors to avoid
- Taxpayers claim a child who is not a qualifying child
- Married taxpayers who should file as married filing separately instead file as single or head of household
- Income-reporting errors
- Taxpayers or qualifying children with incorrect Social Security numbers
EITC errors can potentially delay or even result in denial of the EITC portion of a refund. If you take the EIC even though you are not eligible and it is determined that your error is due to reckless or intentional disregard of the EIC rules, you will not be allowed to take the credit for 2 years even if you are otherwise eligible to do so. If you fraudulently take the EIC, you will not be allowed to take the credit for 10 years and may also owe penalties.
Earned Income Tax Credit Certification Test
The IRS has asked some Earned Income Tax Credit (EITC) claimants to verify that they meet key eligibility requirements in order to claim their earned income tax credit. Those contacted should respond immediately to ensure they receive the EITC they deserve