The EITC, or Earned Income Tax Credit, is a tax credit refund for people and families who are in the low-income bracket. The credit’s amount depends on your income level and how many people you support. The refund can even be greater than the taxes you’ve paid. Here are the latest details about the EITC.
General requirements:
You must have a valid Social Security Number.
You must be a U.S. citizen or a resident alien for the whole year.
You can’t file under the married filing separately status, or use the foreign earned income exclusion.
You can’t be anyone else’s qualified child.
You (and your spouse, if you are married), are between the 25 and 64 years of age.
Adjusted Gross Income (AGI) maximum limits (Form W-2):
- $43,279 (joint filing, married: $48,279) for three or more qualified children
- $38,646 (joint filing, married: $41,646) for two qualified children
- $33,995 (joint filing, married: $36,995) for one qualified child
- $12,880 (joint filing, married: $15,880) if there are no qualified children
Investment limitations:
Income from investments must be at most $3,100 for the year. This includes dividends, interest, royalties and capital gains.
Tax credit amounts:
2009 maximum EITC
- $5,657 for three or more qualified children
- $5,028 for two qualified children
- $3,043 for one qualified child
- $457 if there are no qualified children
2010 maximum EITC
- $5,666 for three or more qualified children
- $5,036 for two qualified children
- $3,050 for one qualified child
- $457 if there are no qualified children
Qualified children (Form 1040)
The child must be related to you by birth, marriage, adoption or a similar relation.
The child must be 18 years of age or below at the end of the year, or 23 years of age or younger but enrolled as a full-time student.
The child must have been living with you in the United States for more than half the year.
The child must have a valid Social Security Number.
If the child is totally and permanently disabled, you can claim the child for your EITC regardless of the age.
Do take note that if you filed under married filing separately, then you cannot claim the EITC. But if you are separated from your spouse and your spouse has not lived with you for the last six months of the year, then you can file as the head of the household and claim the EITC.
Cash Advance (Form W-5)
You can receive the EITC along with your paycheck if you qualify for it, as the Advanced Earned Income Tax Credit. Your employer can release up to $1,826 in cash for the 2009 calculations. However, you must make sure. Otherwise, you’ll have to pay it back. It’s best to check with your local government offices on this matter.
Sign up on the box at the right for more information on the Earned Income Tax Credit and other similar options.
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