The Earned Income Tax Credit (EITC)
Who Qualifies for the Earned Income Credit?
The Earned Income Tax Credit (EITC) was created to help low-income workers, self-employed individuals, and their families. The Earned Income Tax Credit is being utilized by more taxpayers than ever as a means to offset their loss of (or reduction in) income.
The Earned Income Tax Credit can result in either a tax credit to offset income tax due or a tax refund. Economic stimulus packages have increased funds for the Earned Income Tax Credit so more families could qualify for this tax relief.
“Earned income” is from work performed for someone who pays you, or from work you perform in a business you own.
Taxable earned income includes the following:
- Wages, salaries and tips
- Union strike benefits
- Long-term disability benefits received prior to minimum retirement age
- Net earnings from self-employment
The qualifications and income limits are explained below.
Earned Income Tax Credit: Eligibility Requirements
The IRS has strict guidelines for determining who can claim the Earned Income Tax Credit on their tax return.
You may claim the EITC if your income is low to moderate. The amount of your credit may change if you have children, dependents, are disabled, or meet other criteria. Note that special EITC rules may apply to military and clergy because using this credit may affect other government benefits.
To qualify for the EITC, you must:
- Show proof of earned income
- Have investment income below $3,650 in the tax year you claim the credit
- Have a valid Social Security number
- Claim a certain filing status (other than Married Filing Separately)
- Be a U.S. citizen or a resident alien all year
You are eligible to claim the EITC without a qualifying child if you meet all the following rules. You (and your spouse if you file a joint tax return) must:
- Meet the EITC basic qualifying rules (above)
- Have your main home in the United States for more than half the tax year (this includes the 50 states, the District of Columbia, and U.S. military bases; it does not include U.S. possessions such as Guam, the Virgin Islands, or Puerto Rico.)
- Not be claimed as a qualifying child on anyone else’s tax return
- Be at least age 25 but under age 65 at the end of the tax year (usually Dec. 31)
You are not eligible to claim the EITC if:
- Your filing status is married filing separately
- You filed a Form 2555 (related to foreign earned income)
- You or your spouse are nonresident aliens (with a few exceptions)
You can use the IRS EITC Qualification Assistant to find out if you qualify and for the Earned Income Tax Credit and how much.
RELATED: The Expanded Child Tax Credit
Earned Income Tax Credit: 2021 Income Requirements
To qualify for the Earned Income Tax Credit, you must meet the income thresholds below.
The maximum Adjusted Gross Income (AGI) you can have to claim the EITC is as follows, based on your filing status:
- 0 qualifying children – $15,980 for Single, Head of Household, or Qualifying Widow/Widower; and $21,920 for Married Filing Jointly
- 1 qualifying child – $42,158 for Single, Head of Household, or Qualifying Widow/Widower; and $48,108 for Married Filing Jointly
- 2 qualifying children – $47,915 for Single, Head of Household, or Qualifying Widow/Widower; and $53,865 for Married Filing Jointly
- 3 qualifying children – $51,464 for Single, Head of Household, or Qualifying Widow/Widower; and $57,414 for Married Filing Jointly
The maximum amounts that can be claimed for the Earned Income Tax Credit for tax year 2021 are as follows:
- 0 qualifying children – $543
- 1 qualifying child – $3,618
- 2 qualifying children – $5,980
- 3 qualifying children – $6,728