The IRS announced the 2016 Earned Income Credit amounts which have some small changes from the 2015 EIC. In a statement, they noted that for tax year 2016 the maximum Earned Income Credit (2016 EITC) amount is $6,269 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,242 for 2015 EITC. According to the rules, much has stayed the same in calculating the ”earned income amount” This is the amount of earned income at or above which the maximum amount of the earned income credit is allowed. You can see this amount on the 2016 EIC table.
The earned income tax credit is a powerful tool fighting poverty and changes each year. You can receive this money when filing a yearly tax return. Each person will receive a different amount and taxpayers must look at the current 2016 EITC table to estimate the amount of credit that will be on their tax return. Some taxpayers may not owe any tax because of the credit and receive a very large tax refund due to the EITC. Remember, that there are small changes from the 2015 earned income credit so taxpayers should always double check before relying on any funds. This could have an effect on the size of the tax refund received by some taxpayers.
The IRS revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phase-outs. It is updated yearly and below is the most current amounts. Below is a current earned income credit tax table for tax year 2016. Taxpayers can use this EIC table to complete their own taxes or use it to double check that their tax preparer is correcly preparing their 2015 tax return and claiming all credits when they get it done during the 2016 filing season.
2016 Earned Income Credit Table
|Number of Qualifying Children|
|One||Two||Three or More||None|
|Earned Income Amount||$9,920||$13,930||$13,930||$6,610|
|Maximum Amount of Credit||$3,373||$5,572||$6,269||$506|
|Threshold Phaseout Amount (Single, Surviving Spouse, or Head of Household)||$18,190||$18,190||$18,190||$8,270|
|Completed Phaseout Amount (Single, Surviving Spouse, or Head of Household)||$39,296||$44,648||$47,955||$14,880|
|Threshold Phaseout Amount (Married Filing Jointly)||$23,740||$23,740||$23,740||$13,820|
|Completed Phaseout Amount (Married Filing Jointly)||$44,846||$50,198||$53,505||$20,430|
The 2016 Earned Income Credit still is a tax credit that many Americans will continue to rely upon. Taxpayers can use this 2016 EITC to estimate how much they will receive from the earned income tax credit during the 2016 tax year. When using the EITC table, it absolutely essential to be certain of your tax filing status. This will have a big impact on the amount of the credit that you will receive. Be careful to note that the numbers are slightly different than the 2015 earned income credit. Very important to make sure you are claiming the 2016 earned income tax credit for your 2016 federal income taxes.
Restrictions on 2016 Earned Income Tax Credit
For taxable years beginning in 2016, the earned income tax credit is not allowed if the aggregate amount of certain investment income exceeds $3,400. This would be if someone owns many investments that are generating income. The IRS does not want people to use the EITC when they have other means of supporting themselves.
There are also other limits related to the advancing the earned income tax credit. If you are unfamiliar if you will qualify for the 2016 earned income tax credit, it may be best to consult with a skilled tax preparer or use software that will allow you to determine the amount you can receive.
Other 2016 Earned Income Credit Information
Remember, certain taxpayers may also be eligible for state earned income tax credit programs. It is important to check with you local state tax authority to learn about other programs that low-income taxpayers could qualify for. There are many out there that can provide a boost to income right away at tax time.
It is also important to be honest when claiming the tax credit. The IRS is vigorously enforcing EITC fraud and will investigate suspicious claims. This could lead to large penalties and fines if a taxpayer is caught claiming the EITC when they should not have been claiming it. However, many EITC errors occur primarily because of the complex rules related to claiming the credit and are unintentional. If this is really the case, the IRS could be lenient in fines or penalties levied against the taxpayer who submitted the incorrect EIC claim. They understand that the instructions are long and earned income tax credits can be confusing to professionals as well as ordinary taxpayers. Taxpayers should not hesitate to file for the EITC because they feel they are at an increased risk for an audit if they really should qualify for the funds.
More Information about 2015 and 2016 Earned Income Tax credit (2015 EIC)
- Claiming EITC for Prior Tax Years
- 2015 Earned Income Tax Credit (2015 EIC)
- Is child support considered earned income when calculating the earned income credit?
- EITC and Veterans
- Filed Tax Return Forgot Earned Income Credit EIC
- Form W-5 Earned Income Credit
- State Earned Income Tax Credit