Earned Income Credit (EIC)

The Earned Income Tax Credit (EITC or EIC) is a tax benefit for taxpayers with low to moderate income. It can either give you a tax refund or reduce the tax you owe.

In order to qualify for this credit, you must have earned income. This can be from working, owning a business and meeting certain requirements.

The following requirements are that you:

• You, your spouse, and dependent have a valid social security number (SSN) for employment
• Do not have your filing status as married filing separately
• Are a U.S. citizen, resident alien for the entire year, or a nonresident alien married to a U.S. citizen (married filing jointly)
• Do not have foreign earned income
• Do not have investment income over the annual set amount ($3,650 for tax year 2020)
• Have income from employment or from self-employment
• You/your spouse are not qualifying children of another person
• Have a qualifying child who meets the age, relationship, residency, and joint return tests (they cannot qualify as someone else’s dependent) 
• Must be age 25 to 65, not qualify as a dependent, and live in the United States for over half a year

Each tax year has annual adjusted amount per tax year. For example, for tax year 2020, the maximum amount of the EIC is $6,660 with three or more qualifying children. $5,920 with two qualifying children and $3,584 with one qualifying child.

This entry was posted on Thursday, November 19th, 2020 at 5:50 pm and is filed under Credits. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.