What You Need To Know About The Earned Income Tax Credit (EITC)

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(For 2016 tax year, click here.) 

The Earned Income Tax Credit (EITC) is one of the most beneficial tax policies for low-income families. It is a refundable federal income tax credit for individuals and families who work and meet certain requirements. To be eligible for the EITC in the 2017 tax year, you must have earned income, which must be below a certain limit depending on how many qualifying children you have:

Number of Qualifying Children
 Individual Worker Limit
 Married Filing Jointly Limit
 0  $15,010  $20,600
 1  $39,617  $45,207
 2  $45,007  $50,597
   3+  $48,340  $53,930

 

If you meet these income requirements, you may be eligible for the maximum credit:

Number of Qualifying Children
    Maximum Credit in 2017
 0  $510
 1    $3,400
 2    $5,616
   3+    $6,318

 

Often, this credit will be larger than the amount of taxes that you owe. In this case, you will receive a tax refund. This can provide a once-a-year opportunity for families to access extra income, which can be put into a savings account or other savings vehicle, while allowing you to maintain the same budget.

How it works:
  • You must have a valid Social Security Number.
  • You must have earned income from your job, working for yourself or another source.
  • Your filing status cannot be married, filing separately.
  • You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
  • You must be at least 25 years old.
  • You cannot be a qualifying child of another person.
  • Cannot file Form 2555 or 2555-EZ (related to foreign income).
  • You can have only limited amount of investment income; see EITC Income Limits, Maximum Credit Amounts and Tax Law Updates for the amount.

Other Important Information about the EITC:
  • If you are eligible to receive the EITC through your federal income tax return, you may also be eligible to receive a credit through your state or local income tax return. There are currently 27 state and local governments that offer state EITCs. Click here to find out if your state offers an EITC.
  • While federal refunds from the EITC cannot be used to determine eligibility for other social programs, state EITC funds may affect this eligibility. It is important to know if this is the case.
  • Investment Income Limit must be $3,450 or less for the year.
  • Click here to learn more about the EITC program. If you have trouble with the link, go to www.irs.gov and enter EITC into the search field at the top right of the screen.

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