Earned Income Tax Credit & Credit Table
Although an incredible number of families currently claim this unique tax break for wage earners with low earnings, the IRS says substantially more qualify for this refundable tax credit yet neglect to take advantage of it.
The guidelines for (EIC) Earned Income Credit Table were recently liberalized; therefore many more families meet the requirements and can claim the credit. Take a couple of minutes to ensure you don’t pass up a credit that might provide you with a bigger refund check.
Table of Contents
- 1 Here is a Look at the EIC Table Amounts
- 2 Do I Qualify For The Earned Income Tax Credit?
- 3 Tests for qualifying
- 4 Video – Earned Income Tax Credit Explained
- 5 How Much Can I Make and Still be Eligible?
- 6 Does My Child Qualify?
- 7 For Instance:
- 8 Who is a Qualified Foster Child?
- 9 What About My Welfare Benefits?
- 10 IRS Announcing Changes to Earned Income Tax Credit for 2017 Tax Returns
Here is a Look at the EIC Table Amounts
|Dependents||Maximum Credit||Adjusted Gross Income|
Do I Qualify For The Earned Income Tax Credit?
For those who are married submitting together and made under $52,427 ($46,997 for individuals, remaining partners or heads of household), you probably are entitled to this tax credit, or maybe for a rebate. It’s complex, however the Earned Income Tax Credit (EITC) is definitely worth looking into if you or anyone you know has moderate income.
The credit decreases all federal income tax you currently owe, dollar-for-dollar. If the credit totally wipes out your tax bill and some credit remains, it is possible to get a cash tax refund for the outstanding amount. To enable you to see if you are eligible, TurboTax Online asks easy questions to help you get the biggest available credit.
Tests for qualifying
To begin with you must meet the requirements. After that your earnings must be within indicated limits. Lastly, for those who have at least one child, they must qualify too in order to get a bigger credit. Once you pass all of these checks, you can get a credit of up to $6,143 based on your earnings as well as the amount of children you have.
When you figure out if you will be eligible for the credit, use the Earned Income Credit chart located in the instructions for Form 1040 (or Forms 1040A or 1040EZ) to locate your earnings and see the amount of credit you’re eligible for.
You are eligible when:
- You have revenue from earnings (such as, from employment, your personal business, union strike benefits, selected long-term disability benefits).
- You did not earn over $3,350 in interest or dividends, or earnings from rentals, royalties or stock along with asset earnings in the course of 2015.
- You are single or, if married, do not use the Married Filing Separate standing.
- You, your wife or husband and children, if qualified, all have Social Security numbers.
- You together with your spouse are not regarded as a child on somebody else’s tax return for reasons of the earned income credit.
- You are not cutting out any money you earned overseas on your return.
- You are a citizen or resident of the United States of America.
- You have dependents.
- You do not have an eligible child, however you and your husband or wife are between 25 and 65, not the dependents of other people, and you have resided in the USA for over 6 months.
Video – Earned Income Tax Credit Explained
How Much Can I Make and Still be Eligible?
This credit is aimed at families with modest earnings, therefore if you make “too much” you might not be eligible. Exactly how much are you able to make and still meet the criteria? This will depend on the number of qualifying children you have (we are going to specify this shortly). Those that have the lowest earnings are eligible for the largest credits.
Those that have earnings above the phase-out limit are eligible for lesser credits until they get to the stage where the credit is removed altogether. The guidelines were liberalized to trigger increased credits for quite a few families, particularly those with 3 or more eligible children. The following table displays the 2015 earnings restrictions for getting credits along with the highest possible 2015 credit amounts.
Does My Child Qualify?
To be eligible, the child has to be:
- Your son, daughter, stepchild, adopted child or a descendant.
- Your foster child, transferred to you by an official agency or court ruling.
- Your brother, sister, stepbrother, stepsister or a descendant of one of them.
- Age 18 or under as of the year’s end (except if they are a full-time student, in which scenario the student has to be 23 or younger). Exclusion: An individual that is irreversibly and completely handicapped at any time throughout the year is eligible, irrespective of their age.
- A resident living with you in the USA for over 6 months.
You and your sister are living with each other. You are 30 but your sister is 15. When your mother and father passed away 2 years before, you took over the care of your sister, except you did not actually adopt her. She is regarded as an eligible child since she resided with you over half of the year.
Who is a Qualified Foster Child?
With regard to the Earned Income Credit, a foster child is considered someone who is transferred to you by an official placement agency or court ruling. The child should have resided with you for more than 6 months.
What About My Welfare Benefits?
The Earned Income Tax Credit does not have any impact on particular welfare benefits. Any kind of tax refund you get due to the EITC is not regarded as income when figuring out if you qualify for, or the amount of money you can get from, the following benefit programs:
- Temporary Assistance for Needy Families (TANF)
- Medicaid and Supplemental Security Income (SSI)
- Food stamps
- Low-income housing
To learn more on if you are eligible for the credit, make use of TurboTax Online tax filing. A summary is also obtainable in Publication 962: Possible Federal Tax Refund Due to the Earned Income Credit. For full particulars, see IRS Publication 596: Earned Income Tax Credit (EITC).
IRS Announcing Changes to Earned Income Tax Credit for 2017 Tax Returns
Changes to Earned Income Credit Table (EITC) will be announced over the summer months and into the fall of 2016. Early filers will be affected by the proposed changes. On December 18, 2015, an act entitled Protecting Americans from Tax Hikes Act of 2015 (also known as PATH Act) was enacted for the benefit of taxpayers and taxpayer families.
In this law, Section 201 requires that credits or refunds cannot be released to taxpayers before February 15 of any tax year. The changes take effect on January 1, 2017. Additional time is given to prevent lost funds occurring from identity theft or refund fraud in regards to withholdings and/or fabricated wages.
The regulations regarding the PATH Act and receiving tax refunds or credits early are:
- Partial refunds will not be issued. Entire refunds will be held until all credits and refunds are verified.
- There are no changes to the way that tax returns are prepared, for either professional tax preparers or individuals.
- Changes to the opening date filing season will not occur. Returns can be accepted on the first day that filing season is open. Paper filing may start on January 1, 2017. E-file and other electronic forms of filing may begin on January 20, 2017 – no e-file or electronic free file returns will be accepted before January 20, 2017. Paper returns will begin processing on January 20, 2017.
- The average issuance time for tax refunds will remain an estimated 21 days or less, with no refunds being issued before February 15 where EITC and ACTC are involved.
According to the IRS, the plan is to educate taxpayers with the assistance of IRS partners and stakeholders, regarding the changes to EITC refund/credit policy. This additional step is to assist the IRS ensures that all taxpayers are provided the refunds they are due. Updates regarding these changes will begin to be available on the IRS.gov website.
Remember, if you file online with TurboTax they will ask you the correct questions to let you know which deductions you qualify for and guarantee you will receive the largest refund ever.