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All About the Earned Income Tax Credit (EITC)

Debt Relief Education / Debt Relief  / All About the Earned Income Tax Credit (EITC)

The Earned Income Tax Credit is a refundable tax benefit for low- and moderate-income earners – this means that these workers will be able to get their money even if they don’t owe tax. There are, however, a number of requirements that are needed before you can qualify for the benefit. The amount of the refundable tax credit given depends on different factors like income, number of children, and others. You can see if you qualify by using the EITC Assistant on the IRS website.  If you qualify for the credit, it is essential that you claim it when you do your taxes. You are still qualified for the tax credit even when you haven’t claimed it when you filed your taxes for over two years. In this article, we will discuss Earned Income Tax credit, how to qualify for it, how much you can get, and more.

Qualifying for the Earned Income Tax Credit

There are other requirements apart from being a low to medium income worker needed to qualify for the Earned Income Tax Credit. Highlighted below are the requirements that you need to qualify for this refundable tax credit:

  • Your earned income must be at least $1 – unemployment and pensions don’t count;
  • You must reside in the US for over six months;
  • If you have no child, no one can claim you as a dependent;
  • Your investment income for 2019 must not exceed $3,600 and for 2020, $3650;
  • If you are married, you can’t claim the tax credit separately;
  • Only one person can claim a qualifying child;
  • You need to be 25 or over to qualify; and
  • Military and clergy people have special requirements to qualify for this tax credit.

Requirements when claiming children

There are some tests that your children have to pass to qualify for the tax credit if you are claiming them. The child must be related to you, must be under 19 years, and the child must have lived with you for over six months. You also need a social security number for each child you are claiming.

How much you can get with Earned Income Tax Credit

For you to qualify for this credit for tax due in April 2020, both your earned and gross income must be below the specified range highlighted below;

  • For those with no children — $21,370 for joint fillers, $15,570 for single households;
  • For those with one child– $46,884 for joint fillers, $41, 094 for single households;
  • For those with two children– $52,493 for joint fillers, $46,703 for single households; and
  • For those with three children or more– $55,952 for joint fillers, $50,162 for single households.

The less you earn, the more the earned income credit. For those with no children, the maximum earned income tax credit they qualify for is $529. For those with one child, it is $3,526, those with two children, it is $5,828, and those with three or more children, it is $6,557.

This tax credit was developed to reduce the amount of tax low and moderate-income workers paid. Quite a number of workers have enjoyed the benefits – if you fit all the requirements, it is crucial that you claim it.  The tax code is enormously complex.  If you have found yourself in tax trouble, The Debt Relief and Education Foundation has pro bono lawyers that will fight for you.  Contact The Debt Relief and Education Foundation today for a free consultation.