Eligibility

The Earned Income Tax Credit (EITC) is designed to assist people with limited incomes by reducing the amount of federal income tax they owe. Even those who don’t earn enough money to owe federal income taxes may be eligible for an EITC.

The EITC program was established in 1975 and is administered by the Internal Revenue Service (IRS). Through this program, qualifying low income workers and families get significant savings on their income taxes. Approximately 22.7 million families claimed Earned Income Tax Credits totaling $42.6 billion in tax year 2005, an average savings of $1,877 per family.

The credit can be claimed when filing your annual federal tax return. For tax year 2019 (filing by April 2020), the EITC ranges from $529 to $6,557, depending on your adjusted gross income and the number of qualifying children in your family. There is no limit to the number of times you can claim an EITC; you can claim one every year that you are eligible.

EITC Adjusted Gross Income (AGI) Limits and Maximum Credits*

No Children

1 Qualifying Child

2 Qualifying Children

3 or More Qualifying Children

Single

AGI limit: $15,570
Max credit: $529
AGI limit: $41,094
Max credit: $3,526
AGI limit: $46,703
Max credit: $5,828
AGI limit: $50,162
Max credit: $6,557

Married (filing jointly)

AGI limit: $21,370
Max credit: $529
AGI limit: $46,884
Max credit: $3,526
AGI limit: $52,493
Max credit: $5,828
AGI limit: $55,952
Max credit: $6,557
* Figures are for tax year 2019 (filing by April 2020).
Example
Roberto is single and has one child. Based on his income, he qualifies for a $3,526 Earned Income Tax Credit. Without the EITC, he would owe $2,000 on his federal income taxes. With the tax credit, he receives a refund of $1,526 from the IRS.

Program Eligibility

To be eligible for the Earned Income Tax Credit you must meet several criteria:

  • You must meet adjusted gross income requirements (see table above).
  • You must have earned income from employment, self-employment, or employer-paid disability benefits received prior to retirement.
  • You must have a Social Security Number valid for employment.
  • You cannot file your taxes as “married filing separately.” If you’re married, you must file a joint tax return.
  • You must be a U.S. citizen or resident alien. If not, you must be married to a U.S. citizen or resident alien and filing a joint tax return.
  • You must live in the U.S. for more than half of the year.

Age Requirements:

  • If you are claiming qualifying children, you can be any age.
  • If you’re not claiming a qualifying child, you must be 25–64 years of age.

Additional requirements:

  • You cannot claim foreign income or a foreign housing deduction using Form 2555 or Form 2555EZ.
  • You must not have investment income that exceeds $3,600 (for tax year 2019).
  • You cannot be the dependent of another person.
  • You cannot be the qualifying child of another person.

More on Earned Income

To qualify for an EITC, you must receive earned income. This can include your wages, salaries, tips, net earnings from self-employment, or any other form of taxable pay. You can also elect to include nontaxable combat pay as earned income.

Employer-paid disability payments received prior to retirement are considered earned income under the EITC program. But benefit payments received from a policy you paid the premiums for, or that you received post-retirement, would not be considered earned income.

Other items that do not qualify as earned income under the EITC include:

  • Interest and dividends
  • Social Security and railroad retirement benefits
  • Pensions and annuities
  • Alimony and child support
  • Workers’ compensation benefits
  • Unemployment compensation
  • Welfare benefits
  • Veterans’ benefits

If you are married and filing jointly, at least one spouse must receive earned income to be eligible for an EITC.

Adjusted Gross Income

In addition to the earned income requirement, you must have an adjusted gross income (AGI) below certain levels to qualify for an EITC.

Your adjusted gross income (AGI) includes all earned income before deductions for taxes, health care or other expenses, minus certain business, education-related, and other expenses. While filling out your annual tax return (IRS Form 1040), you will be asked a series of questions that will allow you to determine what your AGI is.

Example

John earned $30,000 in wages for the year before taxes and other deductions were taken out of his paychecks. He also earned $4,000 in employer-paid disability insurance payments for the year. He had no deductions for business, education-related, or other expenses. According to the IRS program, John’s adjusted gross income would be $34,000—his gross wages plus payments received from the employer-paid disability insurance.

Adjusted Gross Income and Qualifying Children

For a child to be considered a qualifying child under EITC, several requirements must be met:

  • Relationship: The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these (for example be your grandchild, niece, or nephew).
  • Residence: Generally, the child must live in the same place as you for more than half the year and have a valid Social Security number. (There are some exceptions to this. For an overview, click here. For the complete list, you can read Publication 596 from the IRS.)
  • Age: At the end of the tax year, the child must be under 19. Or, if attending school full-time, the child must be under 24. The only exception is for children who are permanently and totally disabled. If your child is permanently and totally disabled, the child can be any age, even an adult.

According to the IRS, a person is considered “permanently and totally disabled” if their condition is expected to last continuously for at least one year or is expected to result in death, and if they cannot perform any Substantial Gainful Activity (SGA). For tax year 2019, this means they cannot earn more than $1,220 per month ($2,040 per month if they are blind).

Note: Qualifying children can only be used by one family member to claim an EITC.

If you don’t have any qualifying children, the maximum adjusted gross income you can have and still qualify for an EITC is $15,570 ($21,370 for a couple).

With one qualifying child, your AGI can be up to $41,094 ($46,884 for a couple). With two or more qualifying children, you can have an AGI of up to $46,703 ($52,493 for a couple). And with three or more qualifying children, you can have an AGI of up to $50,162 ($55,952 for a couple).

Sources

If you are eligible for an EITC, you can get free tax preparation help through a Volunteer Income Tax Assistance (VITA) Center. Most centers can e-file your return for free. If you are self-employed, have all your receipts and a log of expenses ready for the tax preparer. To find a local VITA Center, check 2-1-1 Arizona or the IRS VITA Site List.

IRS Publication 596 is a comprehensive guide to the EITC. It includes information on program rules, calculating and claiming an EITC, rules regarding qualifying children, and sample worksheets.