Happy Earned Income Tax Credit Awareness Day! Are You Eligible?

Tax Deductions and Credits Smiling mid adult man using technologies at table in artist studio

Today is National Earned Income Tax Credit Awareness Day! The Earned Income Tax Credit (EITC) is a huge benefit to taxpayers with low to moderate income and has helped lift millions of people out of poverty. To determine if you qualify, make sure that you file your federal taxes this year.

According to the IRS, more than 25 million filers received the EITC last year, and the average EITC was about $2,400. However, millions of taxpayers are still missing out on this valuable tax credit. The IRS reports that one out of five qualifying filers fails to claim the tax credit.

You may wonder, why someone would miss a tax credit worth up to $6,318 for a family with three or more children? Well, many people who qualify miss out because they are newly qualified or choose, perhaps mistakenly, to not file a tax return because their income falls below the IRS income filing limit ($10,400 single, $20,800 married filing jointly).

When you file your taxes, don’t worry about the figuring the EITC out on your own. TurboTax will ask you simple questions about you and will calculate the credit if you are eligible based on your answers. With TurboTax, you are not charged a fee to claim EITC on your taxes.

Want to know more about the EITC? Here are answers to important questions about the tax credit, and information on how you can qualify.

What exactly is the Earned Income Tax Credit?

The EITC is a refundable tax credit given to taxpayers that earn low to moderate income from a job or being self-employed. It may not only eliminate your income tax liability, but if the credit is more than the amount of tax you owe, you can receive a tax refund for the amount of your credit.

Who is eligible to claim the Earned Income Tax Credit?

Generally speaking, you are eligible for the EITC if you meet the income limits included below, and all of the following apply:

  • You are a U.S. citizen
  • You are over the age of 25 or have qualifying children
  • You do not file “married filing separately”
  • You have earned income from employment. Unemployment income doesn’t count

You also can have interest, dividends and other investment earnings, but not more than $3,450 in 2017. But remember, most importantly, you have to file your federal taxes in order to claim this valuable credit.

What are the income limits?

The limits are adjusted each year and for tax year 2017, your earned income and adjusted gross income must be less than:

  • $48,340 ($53,930 married filing jointly) with three or more qualifying children
  • $45,007 ($50,597 married filing jointly) with two qualifying children
  • $39,617 ($45,207 married filing jointly) with one qualifying child
  • $15,010 ($20,600 married filing jointly) with no qualifying children

What is the amount of the credit?

Your income and number of qualifying children will determine the actual amount of your credit. For tax year 2017 the maximum credits are as follows:

  • $6,318 with three or more qualifying children
  • $5,616 with two qualifying children
  • $3,400 with one qualifying child
  • $510 with no qualifying children

What is a qualifying child?

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

  1. Age: Generally, your child must be under 19, under 24 if they are a student, or any age if permanently and totally disabled.
  2. Relationship: Your child must be either your son, daughter, foster child, or stepchild (including all of their respective children). Your “qualifying child” can also be your brother, sister, half brother or sister, or stepsister or brother (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 tax refund, not because they were actually required to file.

The Protecting Americans from Tax Hikes (PATH) Act, signed into law in Dec. 2015, requires the IRS to hold tax refunds that include the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15, 2018, no matter what tax preparation method you use. The IRS expects the earliest EITC related refunds to be in taxpayer bank accounts or debit cards starting Feb. 27, 2018, if they chose direct deposit and there are no issues with the tax return. The IRS will begin accepting and processing tax returns when they open for the season on Jan. 29, 2018 and encourages you to file as soon as possible so you can get closer to your tax refund!

Special EITC Relief for Hurricane Victims

The IRS is urging victims of last year’s hurricanes, especially those who lived in areas affected by Hurricanes Harvey, Irma, and Maria, to see if they qualify for the Earned Income Tax Credit (EITC). According to the IRS, many people whose incomes dropped in 2017 may be eligible to choose a special option for figuring the EITC so they can be eligible for the tax credit when they may not have been before, or they can receive a bigger credit. The special option is available only to people who lived in one of the hurricane disaster areas during 2017. Under this method, taxpayers whose incomes dropped in 2017 can choose to figure the credit using their 2016 earned income, rather than their 2017 earned income, if it makes them eligible for the EITC or gives them a bigger credit.

However, don’t worry about remembering all of this when you go to file your taxes. TurboTax will ask you up front if you were a victim of the hurricanes and will figure out the computation for you based on your entries. If you still have questions, you can also connect live via one-way video to a TurboTax Live CPA or enrolled agent to get your tax questions answered in the comfort of your home. The TurboTax Live tax expert can also review, sign, and file your tax return.

Comments (14) Leave your comment

  1. If they say that you qualify for tax credits like EIC how do you know if it was added to your refund. Or any of the other tax breaks/credits that they said you qualify for. I have 2 dependents my daughter and her father and I made about 28,300 in 2015.

  2. Hi im a vet that get va compensation and ssdi. I have no income and got married in 2015 and I have 3 dependents can I get the eitc. Thank you in advance.

  3. Hi I’m just wondering if it would be worth me filing if I only received unemployment for 3 months.and didn’t work the rest of the year

    1. Hi, based on this article it actually states that unemployment doesn’t count towards income. So, therefore it wouldn’t count.

  4. I adopted my 2 great grandchildren in March 2015. I went through legal aid because of circumstances and only had to pay $149.00. Will I get the $13,000 child tax credit for each child as I’ve read about?

  5. Hi. I have just filled my taxes and it said I am not qualified for the child credit. My husband and I filled jointly and made about 23,000 in 2014. We have one child that was born on 9/17/2014. It said we did not qualify for the credit. Why is that? From what I have read we should qualify.

    1. Hi Shelli,
      There are limits to the credit. If you don’t have any tax liability you can not take the child tax credit. Per the IRS:

      You must reduce your child tax credit if:

      The amount on Form 1040, line 47; Form 1040A, line 30; or Form 1040NR, line 45, is less than the credit. If this amount is zero, you cannot take this credit because there is no tax to reduce.
      Thank you,
      Lisa Greene-Lewis

  6. If part time student… With very low income made in 2014. Can I claim EIC and deduct student grant? If no income made only student grant can still file tax return? Thanks.

    1. Hi Pat,
      A student grant would not count as income for the EIC. Earned income considered for this credit is taxable income earned from wages or tips. If you didn’t earn any income there is no reason to file your taxes. If you didn’t use all of your student grant for qualified education expenses the unused portion may have to be claimed on your taxes.
      Thank you,
      Lisa Greene-Lewis

      1. Question my EIC was only 153.00 with 2 dependents I filed as head of household and my income for box 1 on my W2 was 43,484 or close

    1. Hi Dede,
      It depends on your income and how much taxes you have had taken out, but with a dependent you may be eligible for credits like the EIC, the child tax credit worth up to $1,000, the dependent exemption of $3,950, and the Child and Dependent Care Credit. TurboTax will walk you through all of these tax benefits.
      Thank you,
      Lisa Greene-Lewis

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