Do I Qualify for the Earned Income Credit?

 

The Earned Income Credit (EIC), aka Earned Income Tax Credit (EITC) is a valuable credit for low-income taxpayers who work, but it can be difficult to understand the rules. You might be asking yourself, “Do I qualify for the Earned Income Credit?”

More on the Earned Income Tax Credit

Taking the time to check the EIC qualifications can pay off, as the tax benefit can be worth up to $6,431 for 2018 depending on your:

earned income credit

  • Filing status
  • Income
  • Number of qualifying children who can’t be claimed by another taxpayer

Earned Income Credit Eligibility

Wondering what the Earned Income Credit eligibility is? The Earned Income Credit is refundable, so you can receive the credit as part of your refund, even if your tax has been reduced to $0. Earned Income Credit eligibility has the following parameters:

  • You and your spouse (if filing jointly) must have valid Social Security numbers (SSN)
  • You can’t file as married filing separately if you’re married
  • You must be a U.S. citizen or resident alien all year
  • You can’t file a Form 2555 or Form 2555-EZ
  • You must have investment income of $3,600 or less
  • You can’t be a dependent or qualifying child of another person for EIC purposes
  • You must have earned income

Earned Income Credit Qualifications If You Have No Children

If you don’t have qualifying children, to qualify for the Earned Income Credit eligibility is as follows:

  • Be at least 25 years old but younger than 65 at the end of 2018 
  • Not be a dependent of another taxpayer
  • Not be a qualifying child of another taxpayer
  • Live in the United States for more than half the year
  • Have earned income and adjusted gross income (AGI) of less than:
    • $15,270 if filing single
    • $20,950 if married filing jointly

Earned Income Credit Qualifications With One or More Children

To qualify for the Earned Income Credit, your child must meet these requirements:

Age — A qualifying child must be under age 19 or a full-time student under age 24. If your child is permanently and totally disabled, the age requirements don’t apply.

Relationship —A qualifying child must be one of these:

  • Son, daughter, stepson, stepdaughter, or eligible foster child
  • Brother, sister, stepbrother, stepsister, half-brother, or half-sister
  • A descendant of any of those people
  • These rules also apply to relationships:
    • Relationships established by marriage aren’t ended by death or divorce.
    • An adopted child is treated as your own child. An adopted child is any child legally placed with you for legal adoption.

Residency —The child must live with you in the same main home within the U.S. for more than half of the year. This doesn’t include Puerto Rico or other U.S. possessions.

Exceptions are allowed for:

  • Temporary absences
  • Children who were born or died during the year (if your home was the child’s home for over half of the time they were alive)
  • Kidnapped children
  • Those who are on extended active duty outside of the United States. They can be treated as having a main home within the United States. Extended active duty equals more than 90 days or for an indefinite period.

Citizenship — A qualifying child must be a U.S. citizen, U.S. national, or U.S. resident. A child who’s a resident of Canada or Mexico doesn’t qualify.

Dependency requirement — You don’t have to claim the child as a dependent. However, a married child is only a qualifying child for EIC purposes if you could claim their dependency exemption.

Marital status — A qualifying child must not file a joint return unless both of these are true:

  • They only file a return to claim a refund.
  • No tax liability would exist for either spouse if both of them had filed separate returns.

Social Security number (SSN) requirement —A qualifying child must have a valid SSN. These don’t qualify:

  • Adoption taxpayer identification number (ATIN)
  • Individual tax identification number (ITIN)

Filing status — You can’t be married filing separately.

Earned income —You must have earned income to meet the qualifications for the earned income credit. Unearned income (interest, sale of investments, pensions, and unemployment) doesn’t qualify for the credit. If you’re a military taxpayer with nontaxable combat pay, you can include the combat pay in income to calculate the EIC.

Income limit — Your earned income and AGI must be less than these limits:

  • With one qualifying child: $40,320, or $46,010 if married filing jointly
  • With two qualifying children: $45,802, or $51,492 if married filing jointly
  • With three or more qualifying children: $49,194, or $54,884 if married filing jointly

Investment income limit — For 2018, you can only claim the EIC if your investment income is $3,500 or less. Investment income includes:

  • Interest
  • Dividends
  • Capital gains
  • Royalties
  • Rental income
  • Passive activity income

Filing Tax Returns in More Than One State With EIC

If you have to file two state tax returns, note that the Earned Income Credit (EIC) is only calculated on your federal return. Some states offer their own version of the credit, which may be based on the federal amount or calculated separately. See the instructions for the state you’re filing.

If You Didn’t Claim the EIC Last Year Can You Amend Your Return and Claim It?

To claim the Earned Income Credit (EIC) for last year, you must amend your return by filing tax Form 1040X by the later of these dates:

  • Within three years from the date of your original return
  • Within two years from the date you paid the tax

Returns filed before the due date — without regard to extensions, such as tax Form 1040X — are considered filed on the due date. Note that if you now have a valid SSN but didn’t claim the EIC last year because you or your child had an ITIN, you may not go back and amend your return to claim the EIC for earlier years.

More Help With the Earned Income Credit

If you’re looking for more hands-on guidance with claiming the Earned Income Credit, H&R Block can help. Whether you make an appointment with one of our knowledgeable tax pros or choose one of our online tax filing products, you can count on H&R Block to help you get back the most money possible.

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