How can I tell if I'm eligible for an EITC?

By Denise Appleby AAA
A:

According to the IRS, over 22 million taxpayers received $41.4 billion dollars in earned income tax credit (EITC) for tax year 2005. On the other hand, it was not claimed by approximately 20 to 25% of eligible taxpayers.

The EITC goes toward reducing eligible taxpayers federal taxes, or increase the amount of refund due and can be up to $4,500 for the year. This can be a significant amount, especially for individuals with lower income.

Eligibility for the EITC includes filing a tax return, and meeting requirements which include the following:

  • You have earned income from employment or from self-employment.
  • You earned less than $12,120 ($14,120 if married filing jointly) and did not have any qualifying children.
  • You earned less than $32,001 ($34,001 if married filing jointly) and have one qualifying child.
  • You earned less than $36,348 ($38,348 if married filing jointly) and have more than one qualifying child.
  • You have a valid Social Security Number.
  • Your filing status is not married filing separately.
  • You were a U.S. citizen or resident alien for the entire year, or a non-resident alien married to a U.S. citizen or resident alien and filing a joint return.
  • You cannot be a qualifying child of another person.
  • You cannot file Form 2555 or 2555-EZ (related to foreign earned income).

The IRS has indicated that millions of taxpayers claim the EITC in error. Check to determine if you are eligible by using the IRS' EITC Assistant, which is available in English and Spanish. The EITC Assistant can also be used to determine the amount for credit an eligible taxpayer will receive. Additional information about the EITC is available in IRS Publication 596.

To read more frequently asked tax questions, see How can I make sure I'm ready to file my taxes?, Common Tax Questions Answered and How can I use a child-tax credit?

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