EITC Awareness Day: Common Questions About Earned Income Tax Credit Answered

Tax Deductions and Credits

IRS kicks off tax season just in time for EITC Awareness Day today.  The earned income tax credit has helped millions of hard-working Americans get out of poverty and can be a credit worth up to $6,044 depending on your income.  Phil Taylor answers common questions to help you understand more about the Earned Income Tax Credit.

According to the IRS, 1 in 5 federal tax filers overlook this important tax credit. It’s the Earned Income Tax Credit or EITC.

EITC is a refundable tax credit given to filers that earn low to moderate income from their job, a business, or from farming. Since the credit is refundable it can result in big tax refunds for those who qualify.

Here are some common questions about the EITC:

Who is eligible to claim the credit?

Generally speaking, you qualify for this credit if you are a U.S. citizen, over the age of 25 or have qualifying children, do not file “married filing separately”, and have earned income from employment within the limits.

It’s not that hard to qualify for this credit. But remember, you have to file your federal taxes to receive it.

TurboTax will ask you simple questions related to you so you can take this valuable tax credit when you file.

What are the income limits?

The limits are adjusted each year, but for tax year 2013 your earned income and adjusted gross income limits are:

  • For those with three or more qualifying children, $46,227 ($51,567 married filing jointly)
  • For those with two qualifying children, $43,038 ($48,378 married filing jointly)
  • For those with one qualifying child, $37,870 ($43,210 married filing jointly)
  • And for those with no qualifying children, $14,340 ($19,680 married filing jointly)

What is the amount of the credit?

Your income and number of qualifying children will determine the actual amount of your credit.

The maximum credit you can qualify for is $6,044 with three or more qualifying children, $5,372 with two qualifying children, $3,250 with one qualifying child, and $487 if you don’t have any qualifying children.

The credit is phased out the closer your income gets to the limits above.

For example, a filer that is married filing jointly with three qualifying children and an income of $51,000 will receive EITC. But that credit would be significantly smaller than if the filers income was $40,000.

What is a qualifying child?

A child qualifies if he/she meets the four tests for: age, relationship, residency, and joint return as follows:

  1. Age – Generally, your child must be under 19, or under 25 if a student; or any age if permanently and totally disabled.
  2. Relationship – Your child must be either your son, daughter, foster child, or step child (including all of their respective children). As strange as it sounds, for purposes of the credit, your “qualifying child” can also be your brother, sister, half brother or sister, or step sibling (including all of their respective children).
  3. Residency – Your child must have lived with you in the U.S. for more than half the year.
  4. Joint Return – Your child must not have filed a joint return. If they did file a joint return it should have been because they were filing for a refund, not because they were actually required to file.

If your child meets all of these tests then he/she is a qualifying child for EITC purposes.

How to I determine my credit amount?

Don’t worry about figuring this all out on your tax return.  TurboTax will calculate your credit based on your answers if you’re eligible. You can simply answer a few questions and let the software do its thing.

What are some mistakes to watch out for?

According to the IRS, some of the more common mistakes filers make when trying to claim the EITC are: claiming a child that is not qualified; mismatching SSNs or names; incorrect income.

Now that you have more information about EITC, you’re ready to file and take advantage of this tax credit you’ve worked so hard to earn.

Comments (99) Leave your comment

  1. Hi Turbo,
    Im a qualifing EITC with one child income of 6,500 i paid morgage interest of 13,000.Hard to beleave, but true.I begged and borrowed through out the year to make such high home interest payments. who gets to claim the interest? the induvigual i borred the funds from ? or do i loose interest seeing how i didnt make enough to itimize

    1. If your total income is $6,500, your taxable income is $0 whether you itemize deductions or not. You are entitled to the mortgage interest deduction. The individuals you borrowed funds from, are not eligible to deduct mortgage interest if they are not on the mortgage.

  2. I received a letter/form stating that I am eligible for EITC. I filled it out and sent it back in immediately but have heard nothing back. I cannot locate the copy I made of it to check the date/amount and am not able to get ahold of a live body to check the status. Should I file again? And with which form since I’ve already completed my 1099 and received my regular tax refund? Thanks in advance.

    1. Hi Elise,
      Any time you file on paper with the IRS, it can take from six to twelve weeks for a response. Do not file an amended return at this time. IRS will send you your EITC as soon as the processing is complete. Filing again will only confuse the system.

      Mary Ellen

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