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Earned Income Tax Credit

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Earned Income Tax Credit

The Earned Income Tax Credit or the EITC is a refundable federal income tax credit for low- to moderate-income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments.

How do workers know if they qualify for the credit? To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return.

Below is a chart that shows possible refundable credits for individuals and families that file a return and meet the requirements of EITC. The American Recovery and Reinvestment Act (ARRA), signed into legislation, February 17, 2009, provided a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children.  The Tax Relief and Job Creation Act of 2010 extended these changes to 2011 and 2012.

Number of Children Earned income must be less than: Maximum
EITC Credit:
3 or More Children $45,060 ($50,270 married filing jointly) $5,891
2 Children $41,952 ($47,162 married filing jointly)  $5,236
1 Child $36,920 ($42,130 married filing jointly) $3,169
No Children $13,980 ($19,190 married filing jointly) $475

Who is Eligible for the EITC?

Click here to determine if you qualify for the EITC.

Workers who qualify for the EITC must file a federal tax return in order to access the credit, even if they would normally not do so because their earnings are too low to pay taxes. Taxpayers must file either Form 1040 or Form 1040A and attach a Schedule EIC.

Those eligible for the EITC must be able to answer “YES” to each of the following for the year 2012:

  • I had earned income from employment or self-employment.
  • My investment income (such as bank account interest) was $3,200 or less.
  • My tax filing status is one of the following:
    • Single
    • Married filing Jointly
    • Head of Household
    • Qualifying Widow(er) with a Dependent Child
  • I have been a U.S. citizen or a resident alien all year OR a non-resident alien married to a U.S. citizen OR a resident alien who is filing a joint return.
  • I am NOT being claimed on another person’s tax return.
  • If I have a dependent, it must be a qualifying child. A qualifying child must:
    • Be your son, daughter, step-child, eligible foster child (or descendant of any of them, for example a grandchild), brother, sister, half-brother, half-sister, step-brother, step-sister (or a descendant of any of them, for example a niece or nephew).
    • Under certain circumstances, a child who is not a relative but is living in your home may meet the guidelines for a dependent child. Click here to determine if the child living with you is a qualifying child.
    • Be under age 19 at the end of 2012, a full-time student under the age of 24 at the end of 2012 or have a permanent and total disability at any time during the year
    • Have lived with you in the United States for more than half of the year.
  • If I do not have any dependents, I:
    • Am at least 25 years of age but under 65 at the end of 2012;
    • Have lived in the United States for more than half the year (military personnel overseas are considered to be living in the U.S. while on active duty)
    • Am not the qualifying dependent of another person.

YOU MAY STILL QUALIFY FOR THE EITC, EVEN IF…

  1. You are not required to file a return, or I don’t owe taxes.
    1. Even if you aren’t required to file a tax return, you can still qualify for the EITC. And if you are eligible for more EITC than you owe in taxes, the government will give you the difference.
  2. You don’t have children.
    1. Single persons and married couples without children may still qualify for the EITC. While the benefit amount is smaller for those without children, you may still qualify for up to $475.
  3. You care for children who are not your own.
    1. Grandparents, foster parents and others caring for children may claim the EITC if they meet the eligibility requirements.
  4. You are currently unemployed, or only worked part of the year.
    1. If you had earned income at some point during the year, you may still qualify for the EITC, if you meet the eligibility requirements.
  5. You are afraid of losing your other benefits.
    1. The EITC does not count as income in determining eligibility for benefits like cash assistance, Medicaid, food stamps, SSI, or public housing. Some benefit programs count the EITC as a resource under certain circumstances. Contact your local Department of Social Services office to find out more.
  6. You don’t take handouts.
    1. The EITC is tax law -- it is not about handouts or hand-ups. Congress created the EITC to make the tax system fairer for all and to reward work. That is why Congress made the EITC law.

Click here to determine if you qualify for the EITC.

Can Tax Filers Claim EITC from Previous Years?

Absolutely. Generally, you must file your claim for EITC or other credits or refunds within 3 years after the date you filed (or should have if you have not yet filed) your original return or within 2 years after the date you paid the tax, whichever is later. Returns filed anytime before due date (typically April 15) are considered filed on the due date. To claim EITC from previous years you must either:

  • File a tax return for the years you were eligible and wish to claim EITC.

    OR

  • If you have already filed a return for previous years, file an amended tax return for the year(s) you were eligible and wish to claim EITC.
If you did not claim the EITC for tax year 2011, click here to see if you are eligible.

If you did not claim the EITC for tax year 2010, click here to see if you are eligible.

If you did not claim the EITC for tax year 2009, click here to see if you are eligible.

Some of our VITA sites can prepare amended and/or prior year federal returns on a case by case basis. To locate/contact a site for details, please visit FREE Tax Prep Sites