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 eligible filers received the EITC last year, and the average EITC was approximately $2,488. 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 $6,431 for a family with three or more children? Well, many people who qualify for the credit miss out on it 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 ($12,000 single, $24,000 married filing jointly).

When you file your taxes, don’t worry about figuring 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. In fact, if you use TurboTax Free Edition, you can file your federal and state taxes for free and claim the Earned Income Tax Credit.

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. While it may eliminate your income tax liability, you may also receive a tax refund for the amount of your credit if the credit is more than the amount of taxes you owe.

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 (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 can qualify if you have income from a home business or provide services

While you can have interest, dividends and other investment earnings, you cannot have more than $3,500 in 2018. But 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 2018, your earned income and adjusted gross income must be less than:

  • $49,194 ($54,884 married filing jointly) with three or more qualifying children
  • $45,802 ($51,492 married filing jointly) with two qualifying children
  • $40,320 ($46,010 married filing jointly) with one qualifying child
  • $15,270 ($20,950 married filing jointly) with no qualifying children

What is the amount of credit?

Your income and number of qualifying children will determine the actual amount of your credit. For tax year 2018 the maximum credits are as follows:

  • $6,431 with three or more qualifying children
  • $5,716 with two qualifying children
  • $3,461 with one qualifying child
  • $519 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.

What if I haven’t filed my taxes for a couple of years and may be eligible for EITC for prior years?

If you haven’t filed your taxes for a few years, this is a good time to file your prior tax returns since you may be eligible for EITC in those prior years. You can file returns for up to three years prior to the current year, so you can still file for tax year 2015 by April 15, 2019, and receive the EITC credit if you are eligible. The IRS reports close to one billion dollars in unclaimed refunds every year, and many taxpayers are surprised to find that some of this money belongs to them in the form of Earned Income Tax Credit when they file previous years returns. Prior-year returns have to be mailed in, but TurboTax has previous years tax products so you can file previous years taxes.

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, 2019, 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, 2019, if they chose e-file with 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. 28, 2019 and encourages you to file as soon as possible so you can get closer to your tax refund!

Don’t worry about knowing EITC tax rules. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for. 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. A TurboTax Live CPA or Enrolled Agent can also review, sign, and file your tax return. Spanish speaking TurboTax Live CPAs and Enrolled Agents are also available.

Comments (17) Leave your comment

  1. My husband is under 65 and has earned income from self-employment. I am over 65 and on social security, therefore no earned income. We are married, filing jointly. Are we eligible for the EITC? When we use free online tax software, it shows we are, but I thought my age makes us ineligible? Thanks.

    1. Hi Kate,
      There are minimum age filing requirements and dependency requirements but there is no maximum age requirement. If you are filing as; Married Filing Jointly (MFJ-No Children) the Earned income and Adjusted Gross Income (AGI) must be below $20,950. Using the Turbo Tax questions will help get the credit you are entitled.
      Hope this helps.

  2. 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.

  3. 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.

    1. This is not tax advice, not an attorney. No, the eitc means earned income tax credit, key part for your situation being the earned part. Social security, pensions etc are considered unearned income. You don’t qualify for this credit, sorry.

  4. 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.

  5. 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?

  6. 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

  7. 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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