The Earned Income Tax Credit (usually referred to as Earned Income Credit or EIC) is a tax credit reserved primarily for low income families. The earned income credit is one of the few credits that are refundable. This means that if the amount of your earned income credit exceeds your federal income tax liability you are refunded the rest. Most other credits simply reduce your tax to zero.
To qualify for this credit, you have to meet certain criteria. The main variables for calculating your earned income credit are your income and the number of children that you have. You can still receive this credit if you do not have any children, but the threshold for how much income you received is lower.
The following criteria will disqualify you from receiving the earned income credit:
- Filing your tax return as married filing separately
- Have interest income of more than $2,900
- Must be a United States citizen and have a valid social security number
- You did not have earned income from either self-employment or from an employer
If you have no qualifying children for EIC, then the following rules also apply:
- You cannot be over the age of 65 at the end of the tax year
- You cannot be under the age of 25 at the end of the tax year
- You must not be claimable as a dependent on someone else's tax return
- You cannot have lived in the United States for less than 6 months and 1 day