The Earned Income Tax Credit (EITC) is a national program that helps low to moderate income working families and individuals by reducing their federal income tax burden.
The amount of the tax credit is based on several factors, including the amount of an individual’s earnings from wages, self-employment or farming. The EITC can provide a refund for as much as $6,269 (for tax year 2016).
In order to claim the EITC, however, you have to file a tax return even if you don’t owe taxes for the previous year.
Basic Eligibility
To qualify for EITC, you must have earned income from employment, self-employment or another source that does not exceed income limits (see below), as well as meet a few additional criteria.
Disability and EITC
Many individuals with disabilities and persons whose child* has a disability qualify for the EITC.
You may claim a child of any age as a qualifying child if the person has a permanent disability and you both meet all other EITC requirements. The tax law definition of totally and permanently disabled is:
- The person cannot engage in any substantial gainful activity because of a physical or mental condition.
- A doctor determines the condition has lasted or the doctor expects it to last continuously for at least a year or lead to death.
*Child: son, daughter, adopted child, stepchild, foster child or a descendant of any of them such as a grandchild; brother, sister, half brother, half sister, step brother, step sister or a descendant of any of them such as a niece or nephew.
Income Limits for 2016
- $47,955 ($53,505 married filing jointly) with three or more qualifying children
- $44,648 ($50,198 married filing jointly) with two qualifying children
- $39,296 ($44,846 married filing jointly) with one qualifying child
- $14,880 ($20,430 married filing jointly) with no qualifying children
Investment income must be $3,400 or less for the year.
Maximum Credit for 2016
- $6,269 with three or more qualifying children
- $5,572 with two qualifying children
- $3,373 with one qualifying child
- $506 with no qualifying children
Remember: To claim EITC, you must file a tax return even if you owe no tax.
Find out if you qualify for EITC. Ask your tax return preparer or visit the EITC website.
