eitc

Top 9 Tips For Earned Income Credit Eligibility

The Earned Income Tax Credit is a financial boost for workers earning $49,078 or less in 2011. Four of five eligible taxpayers filed for and received their EITC last year. The IRS wants you to get what you earned also, if you are eligible.

 

Here are the top 9 things the IRS wants you to know about this valuable credit, which has been making the lives of working people a little easier since 1975.

1.  As your financial, marital or parental situations change from year to year, you should review the EITC eligibility rules to determine whether you qualify. Just because you didn’t qualify last year doesn’t mean you won’t this year.

2.  If you qualify, the credit could be worth up to $5,751. EITC not only reduces the federal tax you owe, but could result in a refund. The amount of your EITC is based on your earned income and whether or not there are qualifying children in your household. The average credit was around $2,240 last year.

3.  If you are eligible for EITC, you must file a federal income tax return and specifically claim the credit – even if you are not otherwise required to file. Remember to include Schedule EIC, Earned Income Credit when you file your Form 1040 or, if you file Form 1040A, use and retain the EIC worksheet.

4.  You do not qualify for EITC if your filing status is Married Filing Separately.

5.  You must have a valid Social Security number for yourself, your spouse – if filing a joint return – and any qualifying child listed on Schedule EIC.

6.  You must have earned income. You have earned income if you work for someone who pays you wages, you are self-employed, you have income from farming, or – in some cases – you receive disability income.

7.  Married couples and single people without children may qualify. If you do not have qualifying children, you must also meet the age and residency requirements, as well as dependency rules.

8.  Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay in earned income for the EITC. If you make this election, the combat pay remains nontaxable.

9.  Free help is available at Volunteer Income Tax Assistance sites to help you prepare and claim your EITC. If you are preparing your taxes electronically, the software will figure the credit for you. To find a VITA site near you, visit the IRS.gov website.

 

Top 9 Tips For Earned Income Credit Eligibility

For more information about the EITC, see IRS Publication 596, Earned Income Credit. The 2011 EIC Chart has all your earned income credit amounts based on total income. You can download this publication and chart from this website or order it by calling 800-TAX-FORM (800-829-3676). The IRS.gov site has a Spanish version if needed.

 

Earned Income Tax Credit IRS Information

Publication 596, Earned Income Credit (EIC)
Tax Topic 601, Earned Income Credit
2011 EIC Chart

EIC Eligibility Checklist

You may claim the EIC if you answer “Yes” to all the following questions.*

Yes No
1. Is your AGI less than:

  • $12,590 ($14,590 for married filing jointly) if you do not have a qualifying child,
  • $32,241 ($35,241 for married filing jointly) if you have one qualifying child, or
  • $37,783 ($39,783 for married filing jointly) if you have more than one qualifying child?

    (See Rule 1.)

X X
2. Do you, your spouse, and your qualifying child each have a valid SSN? (See Rule 2.) X X
3. Is your filing status married filing jointly, head of household, qualifying widow(er), or single? (See Rule 3.)

Caution: If you or your spouse is a nonresident alien, answer Yes only if your filing status is married filing jointly. (See Rule 4.)

X X
4. Answer “Yes” if you are not filing Form 2555 or Form 2555-EZ. Otherwise, answer “No.” (See Rule 5.) X X
5. Is your investment income $2,900 or less? (See Rule 6.) X X
6. Is your total earned income at least $1 but less than:

  • $12,590 ($14,590 for married filing jointly) if you do not have a qualifying child,
  • $32,241 ($34,241 for married filing jointly) if you have one qualifying child, or
  • $37,783 ($39,783 for married filing jointly) if you have more than one qualifying child?

    (See Rules 7 and 15.)

X X
7. Answer Yes if you (and your spouse if filing a joint return) are not a qualifying child of another person. Otherwise, answer No. (See Rules 10 and 13.) X X
STOP: If you have a qualifying child, answer questions 8 and 9 and skip 10-12. If you do not have a qualifying child, skip questions 8 and 9 and answer 10-12.*
8. Does your child meet the age, residency, and relationship tests for a qualifying child? (See Rule 8.) X X
9. Is your child a qualifying child only for you? Answer Yes if your qualifying child also meets the tests to be a qualifying child of another person, but the other person is not claiming any child-related tax benefits using that child. Answer No if you do not know whether the other person is claiming any child-related tax benefits using that child. X X
10. Were you (or your spouse if filing a joint return) at least age 25 but under age 65 at the end of 2007? (See Rule 11.) X X
11. Answer Yes if you (and your spouse if filing a joint return) cannot be claimed as a dependent on anyone else’s return. Answer No if you (or your spouse if filing a joint return) can be claimed as a dependent on someone else’s return. (See Rule 12.) X X
12. Was your main home (and your spouse’s if filing a joint return) in the United States for more than half the year? (See Rule 14.) X X
*PERSONS WITH A QUALIFYING CHILD: If you answered Yes to questions 1 through 9, you can claim the EIC. Remember to fill out Schedule EIC and attach it to your Form 1040 or Form 1040A. You cannot use Form 1040EZ. If you answered Yes to questions 1 through 8 and No to question 9, see Rule 9 to help you determine whether you can claim the EIC. If you answered Yes to questions 1 through 7 and No to question 8, answer questions 10 through 12 to see if you can claim the EIC without a qualifying child.
PERSONS WITHOUT A QUALIFYING CHILD: If you answered Yes to questions 1 through 7, and 10 through 12, you can claim the EIC.
If you answered “No” to any question that applies to you: You cannot claim the EIC.