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Do You Qualify for Earned Income Tax Credit?

The Earned Income Tax Credit, EITC or EIC, is a benefit for working people who have what is considered to be a low to moderate income. To qualify for an EITC, there are certain criteria you need to meet, and you must file a tax return even if you don’t owe any taxes or are not required to file a tax return.

It can take time to file for EITC, but it can be worth it if you qualify, because it will reduce the amount of tax you owe and you might even get a refund.

Earned Income Tax Credit

 

How to Qualify

 

To qualify for EITC, you must have earned income from working for someone or from running or owning a business or farm. Eligibility will also be determined based on whether or not you have one or more qualifying children.

The Internal Revenue Service (IRS) offers a free tool online in English and Spanish that can help you determine your eligibility in each tax year:

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant

It is important to choose the right year when using the tool, because the eligibility changes from year to year.

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts

Errors in Filing

 

Making an error on your EITC return can lead to denial of your claim or delay in processing it. If your claim is denied, you would have to fill out a different form to try to overturn the decision to disallow you, which can be a lengthy process.

Filing and Social Security Numbers

Note that a Social Security Number (SSN), such as for a child, must be assigned before you can request EITC for them.

Filing the Claim

To file an EITC claim, you need:

  • Earned income - This includes wages, tips, long-term disability, and/or income from self-employment. Forms of unearned income such as child support, alimony and combat pay are not included. Other special rules may apply:
    https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/special-eitc-rules

  • The correct paperwork
    https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/claiming-earned-income-tax-credit-eitc

  • Your SSN and those of your spouse and any children being claimed

  • The date of birth for everyone being claimed

  • Copies of last year's federal and state returns (you should keep up to 7 years of returns)

  • All income statements: Forms W-2 and 1099, and any business records related to your income from self-employment

  • All records of expenses, such as tuition, mortgage interest, or real estate taxes

  • If you own or run a business or farm, records of all your business-related expenses, organized by category. See https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses for small business tax issues.

  • Dependent childcare information, including the name and address of paid caregivers, with their SSN or other tax identification number

  • Form 1040A or 1040 if you have a qualifying child

  • Form 1040EZ, 1040A or 1040 if you do not have a qualifying child

  • Forms 1095-A, 1095-B or 1095-C, relating to your health insurance

It also helps to have your bank routing number and account number so the IRS can deposit any refund directly.

Previous Tax Years

If you think you might have been entitled to the EITC in previous years because your income was very low, file to try to claim it.

Using Tax Preparers

The IRS website will allow you to file a basic return for free online. However, if you have a lot of income from different sources, and/or numerous deductions, it’s best to get either free help from a volunteer:
https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/free-tax-help-with-my-return

...or paid help from a reputable service:

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/im-paying-someone-to-do-my-eitc-return-what-should-i-know

As you can see, there could be a lot of work to file for EITC. It can really be worth it, though.

 

Earned Income Tax Credit
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